Roy Morgan Research's chief executive officer, Michele Levine, this week took the time to explain some of the enormous changes taking place in consumer behaviour during these tough times.
These changes are occurring against a background of steeply rising unemployment. Morgan says real unemployment as measured by those who are seeking work has risen to 6.4% whereas the ABS figure is still at 4.4% because of the very restricted definitions that they employ.
The fact that unemployment is steady according to the ABS while consumer confidence is down sharply is a good indication that something is wrong. The Roy Morgan figures may be a better reflection what is actually happening.
Higher unemployment and lower consumer confidence is triggering some dramatic changes in spending habits.
The number of people who intend to buy a new vehicle next year has slumped from 11% in September to 8.9% in November and those planning to buy a used car next year has slumped from 7% to 5.8%.
That's as good an indication as any that the coming year is going to be tough one for the motor industry.
Some of the key factors behind the reduction in demand are higher levels of unemployment, fears of falling income and the increased difficulty in obtaining finance.
On the subject of finance, many of those who are paying off their home have loaded up their credit cards to furnish their houses, but those who have paid for their home no longer rely heavily on their credit cards. The number of people who say they have reduced their spending has jumped to 68%. And where they are cutting is fascinating.
In the three months to 30 September, the number of people who ordered home delivered food is down 17.1%. The number of people who went to a pub for a meal is down 14.4%, while the number of people who go to the pub for a drink is down 10.4%. Those going to a cafe for snacks or meals are down 5.1%, BYO restaurant attendance is down 3.6% and licensed restaurants are down 3.1%.
However, the number of people visiting cafés for coffee or tea are on the rise as are the number of people visiting fast food restaurants.
My take on these figures is that there is a dramatic fall in expenditure from lower or middle income groups.
In the retail discretionary sector, the spend on electrical goods and furniture is down between 16% and 20%, but home entertainment equipment is up 34%.
I guess families are rationalising their increased spending in this area by saying that will reduce spending on outside entertainment.
However I might add the findings from a survey of my own. Last week I had to try three restaurants before I could book a table for two. And I filled the last table in the restaurant that took me. It’s not all bad.
This article first appeared on Business Spectator
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