Australian shoppers are cutting back their spending and becoming more buyer-savvy, according to new research, making it even harder for retailers to spark sales this Christmas.
A survey of 500 Australians by Mozo.com.au has revealed 43% of Australians are planning to spend significantly less this festive season, and a further 24% will spend less than they had originally planned.
Mortgage holders are really feeling the pinch, with 60% planning to significantly cut back their Christmas spending, while a further 27% will cut back marginally.
But Mozo managing director Rohan Gamble says low consumer sentiment doesn’t end with home borrowers.
“Even people who don’t have a mortgage are planning to cut back because they’re starting to worry about other rising costs,” Gamble says.
“Interest rates in particular were a massive slap in the face to Australian consumers, so there’s a general concern about what might happen next.”
“The economy is a scary climate at the moment. We’re all a little on edge, which is reflected in a lowering of general consumer sentiment.”
According to the survey, 60% of Australians will cut back on spending by choosing not to purchase presents for family and friends, limiting end-of-year-sales spending, and opting for low-key family entertainment and holidays.
Gamble says any sector centred around discretionary spending will take a hit on the sales front as people find it harder to justify these items.
He says small businesses can still spark sales providing they offer value for money and outstanding customer service.
“People still want to buy gifts and go on holidays but they’re being a bit more frugal – ‘everything in moderation’ is the sentiment,” Gamble says.
“This is not a time to rip people off. Offer genuine products at genuine prices, and focus on good old-fashioned customer service.”
Gamble says it’s crucial for retailers to know their products as consumers become more buyer-savvy.
“Australians’ general product knowledge is way higher than it used to be. This is largely due to the online environment, which makes it so much easier to research and compare products of any type,” he says.
“Customers are exposed to multiple forums including review sites and bloggers, so the challenge for retailers is being ready for any question that a customer might fire at them.”
Debra Templar, of retail services firm The Templar Group, says bricks-and-mortar retailers should offer their products online as a way of boosting sales.
She also stresses the importance of establishing long-term relationships with customers, rather than desperate attempts to engage with them at Christmas.
“It’s about building relationships with customers in the other 46 weeks of the year. How do you delight your customers? With touch points and special events,” she says.
“Retail is in the midst of huge change. With regard to busy sale periods like Christmas, traditional retailers need to start thinking about what they’re going to do at the start of the year.”