Retailers around the country may be in the midst of what is for many the busiest time of the year, but research released by Roy Morgan this week suggests it will be the businesses that offer “experiences” to customers that will likely come out on top.
According to the research, the amount of money Australians spent on “discretionary commodities”, such as clothes, cosmetics or appliances, over the last financial year has dropped 2% compared to the 2014-2015 financial year. Australians spent nearly $105 billion on these items, or $8.1 billion a month, with clothes being the most purchased commodity.
At the same time, spending on experiences, such as leisure activities and entertainment, has jumped significantly, with Roy Morgan reporting a $10 billion year-on-year increase from 2014-2015. Australians spent over $137 billion on experiences in the last financial year, and that number is expected to steadily rise.
Out of that $137 billion, $77 billion was spent on going out, such as trips to the movies, seeing a sporting match, or even just hitting the gym. An estimated $43 billion was spent on entertainment at home, such as entertaining family or ordering takeaway, and another $16.8 billion is spent on gambling.
“The amount Australians spend on going out has increased by 38% over the last seven years, while our clothing spend has increased by 20%,” said Roy Morgan chief executive Michele Levine in a statement.
“Of course, this doesn’t mean retail is dead: just that it needs to adapt to this growing desire for experiences and entertainment.”
Levine says while this trend “poses a challenge” for some bricks-and-mortar retailers, the majority are already evolving their strategies to get customers back in-store.
“[The report] reveals a year-on-year increase in the number of Aussies visiting bricks-and-mortar stores (an additional 90 million visits to retail outlets in the last financial year), which suggests that many retailers are already working to provide customers with an in-store experience that goes beyond the transactional,” she said.
The ritual of Christmas remains
Retail expert and lecturer at Queensland University of Technology Business School Gary Mortimer told SmartCompany that despite the search for experiences, there’ll still be presents under the tree.
“Shoppers will still wrap up presents, but we’ll invest more in experiences like holidays rather than physical products,” Mortimer said.
“The ritual of Christmas remains, but we’re all just being a bit more of conservative in retail spending.”
A recent Westpac consumer confidence survey predicted 2016 will be a “so-so” year for Christmas spending, with 34% of shoppers surveyed stating they plan to spend less than last year come Christmas time.