Wallets might be snapping shut across the country, but Australians haven’t completely axed their discretionary spending.
Over the past six weeks, retailers across the country have lifted the lid on their financial performances for the past year, and cautiously attempted to predict the spending outlook.
The numbers suggest that, even though consumers are holding back on shopping sprees, there are some product categories on which they won’t compromise.
Here are some of the purchases we just can’t quit.
ASX-listed Super Retail Group surprised the market with a stronger-than-expected result this year, but it was its Supercheap Auto chain that shot the lights out.
Sales at the auto parts and accessories business were up 8 per cent for 2023 to $1.45 billion, and momentum was still going strong in the first weeks of the new financial year, even as broader consumer confidence weakened.
Super Retail chief executive Anthony Heraghty said the numbers showed car parts and accessories performed strongly no matter the economic environment.
“When times are good and everyone buys a new car, they buy car wash and car care. When times are tough, car maintenance fires, and that’s exactly what we’ve seen,” he said last month.
Times may be getting tougher, but we’ll never go without a decent coffee.
It’s a tricky task for home-appliance makers to sell their products right now, given the caution around spending on big-ticket items and the boom in these products during the COVID-19 pandemic.
Despite this, the numbers at coffee-machine manufacturer Breville suggest there’s still money in our budgets for technology that delivers the daily caffeine fix.
Revenue for the ASX-listed appliance maker, which sells products right across the world, rose 5 per cent in the APAC (Asia-Pacific) region to $292.2 million in the past financial year. The company acknowledged that demand for its food-preparation products, such as juicers and processors, had weakened, but its new range of coffee machines had landed well with consumers.
“After a quiet [two years] with minimal product launches, these new products added
to growth in the global segment,” chief financial officer Martin Nicholas told analysts last month.
Phones and ‘essential’ consumer tech
Retail analysts have been predicting the slowdown in big-ticket home purchases for months, but it looks like Australians won’t be caught with an out-of-date phone.
Profits dropped at electronics retailer JB Hi-Fi for 2023 but, while boss Terry Smart was cautious on the spending outlook, he said sales of certain “essential” electronics were still going well.
“We’re seeing categories like mobile phones continue to be strong,” he said.
Consumers are also shopping around for new phone plans, which is creating an opportunity for companies such as Kogan, which had a 3.1 per cent jump in revenue from its Kogan Mobile business for 2023, and a 71.5 per cent rise in turnover from its mobile business in New Zealand.
It’s no secret that discount department store Kmart has reached cult status for its homewares, but as shoppers hunt for value, its clothing is gaining traction, too.
Wesfarmers, which owns Kmart and its sibling discount department store Target, told investors and analysts last month that the brands’ apparel offers were performing strongly in the current conditions.
“We’re working really hard on apparel in both Kmart and Target, and we’re seeing some good results because we feel like we’re delivering better value than the majority of players in the market,” Kmart Group’s managing director, Ian Bailey, said.
Kmart is also benefiting from shoppers trading down from other specialty retailers as they hunt for value and the retailer has reported sales growth across every product category in 2023.
Alcohol (but only top-shelf)
Alcohol has long been a resilient category no matter the economic climate, but recent results from winemakers and bottle shops suggest consumers are reaching for top-end tipples despite times being tough.
Treasury Wine Estates’ sales of more affordable drops such as Snoop Dogg’s 19 Crimes declined over the past year, but demand for luxury wines remains strong, its Penfolds label growing earnings by 14.2 per cent for the year to $364.7 million.
“We’ve continued to see robust demand for luxury wine and the Penfolds brand globally,” Penfolds brand’s managing director, Tom King, said.
Dan Murphy’s operator Endeavour Group is also upbeat about sales of its high-end products.
“Encouragingly through the year, we’ve seen continued very strong growth in the sales of luxury and premium wines that make up our Paragon Wine Estates portfolio,” chief executive Steve Donohue said last month.
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Source: Thanks smh.com