Australian Consumers in 2020: A Look into the Future

Australian Consumers in 2020: A Look into the Future

Australian Consumers in 2020: A Look into the Future

Daphne Kasriel

Analyst Insight by Daphne Kasriel-Alexander – Consumer Trends Consultant

 

Australia has elevated itself on the global stage in the last two decades, thanks to a booming mining industry and an influx of economic migrants. However, the country is currently seeing a slowdown in all sectors, with its currency depreciating nearly 20% in just two years. Heading towards the end of this decade, what does the future look like for Australia?

AUSTRALIAN CONSUMERS TODAY  

Not afraid to complain

According to the latest report released in December 2014 by the Australian Competition and Consumer Commission (ACCC), over 7,000 individuals filed complaints and enquiries about small businesses and franchising in the second half of last year. Some complaints have even gone viral online, such as one mother’s complaint about a café which did not let her take her pram inside, and another who complained after being told to stop breastfeeding. In a separate report by Queensland University of Technology and University of Warwick published in the same period in the Journal of Marketing Management, one female participant was quoted as saying: “I believe that being forceful when complaining is effective because I think you need to be halfway between forceful and assertive”.

Just put it on credit

A March 2015 survey by comparison website creditcardfinder.com.au found that more than 40% of the 1,200 Australian credit card holders polled make at least four unplanned purchases on their credit card a month, spending more than A$2,000 (US$1,550). At the top of the list are entertainment and shopping. However, the survey also found that Australians in general have improved their credit card spending habits. “We’re using our cards more and paying more off each month than we used to”, creditcardfinder.com.au financial analyst Michelle Hutchison says. The number of people who make more than 10 unplanned purchases per month has dropped marginally to 9.88%, from 10.19% in 2014. Based on Reserve Bank of Australia figures for March, the number of transactions per credit card is 12.1 per month, with an average balance of A$3,234 and repayment of A$1,692.

Avid travellers still

The weaker Australian dollar did not seem to deter Australians from heading overseas. Australian Bureau of Statistics data released in May reveals that almost 1.02 million people left the country for a short-term break – the first time ever that the million mark was crossed in a single month. New Zealand was the most popular destination, attracting 160,700 Aussie visitors, followed by the USA with 101,300 and Indonesia with 98,500. Australian Federation of Travel Agents CEO Jayson Westbury said the record figure was “a sign of the times”. He explained: “I think it’s an indication that outbound travel is within reach of everybody amid the aviation competition in Australia”. Michael Londregan from luxury travel provider Virtuoso, provided a different perspective: “I expect the dollar’s value will have some impact on spending when Australians get to their destination”.

EMERGING AUSTRALIAN CONSUMERS TRENDS 

Losing patience with online shopping

More Australians are avoiding online shopping due to mounting frustrations. A March study of 1,000 online shoppers commissioned by cloud hosting company Rackspace found that the top three complaints from users giving up online retailing include too many pop-up advertisements (42%), service online being different from in-store (34%) and too time consuming to narrow down options available (28%). In addition, 45% of online shoppers have given up on a purchase after experiencing frustrations with a website, while a further 47% have gone to a different website to purchase the same product. Meanwhile, Australian malls are benefiting from an increase in specialty store sales, driven by the launch of the Apple iPhone 6, reported The Australian newspaper in May. Nonetheless, Euromonitor International forecasts that internet users will increase from 18.6 million in 2014 to 21.6 million in 2019, which will further support the growth of internet retailing.

Moving across the Tasman

For the first time since 1991, there is a net inflow of migrants to New Zealand from Australia. Historically, the migration flow is in the opposite direction as New Zealanders cross the Tasman Sea for better employment opportunities and higher wages. Statistics New Zealand shows a net monthly inflow of 100 migrants from Australia to New Zealand in April 2015. The flow between the two countries is dynamic, according to the independent research body the Royal Society of New Zealand, due to Australians’ unrestricted access to the New Zealand labour market and welfare entitlements.

Sailing the high seas

The latest report by the Cruise Lines International Association released (CLIA) in May 2015 showed that 1,003,256 people took a cruise in Australia, an increase of 20.4% on from the year before. CLIA Australasia chairman Gavin Smith remarked: “Five years ago, the industry thought that it might be possible to achieve one million passengers a year by 2020, but that number was reached last year. If our growth rate continues at just 12.5% for the next six years, we will reach two million passengers by 2020”. According to CLIA, the South Pacific was the top destination, followed by Australian ports, Europe, the Caribbean and Alaska.

AUSTRLIAN CONSUMERS 2020 

Banks no longer favoured for loans

Peer-to-peer lending (P2PL) is set to rise to A$22 billion (US$15.5 billion) in Australia by the end of the decade, predicts financial firm Morgan Stanley. This highlights consumers’ preference for more efficient credit services over traditional financial firms. The A$22 billion is said to represent approximately A$10.4 billion in consumer loans and A$11.4 billion in small-to-medium enterprises lending. Investment banking firm Goldman Sachs’ CEO Lloyd Blankfein was recently quoted: “The traditional means by which financial services are delivered to consumers and small businesses is being fundamentally re-shaped by advances in technology and a focus on customer experience”.

An ageing society

Australia’s undersupply of housing has been a problem in recent decades but going forward, it will only worsen, according to the 2015 Intergenerational Report released by the Federal Government released in March. The ageing population is expected to have a significant impact on the residential market. As the country’s population grows by 1.3% a year to reach 30.7 million by 2055, another nine million dwellings will be needed in the next 40 years to accommodate the growth.

Population Profile of Australia: 2010-2029

Australia-Population

Source: Euromonitor International from national statistics

Note: Data for 2015 onwards is forecast

Living in little boxes

According to recent Australian Census data, one- and two-person households now represent 54% of all households in this country, and young people, particularly women in their 20s, are dominating this market sector. Across the country, 40% of new dwellings are now apartments or units, and building approvals outnumber those for houses. In Melbourne, for example, the inner city sees an increasing number of high-rise residential towers (above 30 storeys) with almost half of them smaller than 50 square metres. The Property Council of Australia and much of the industry acknowledge the problem, and there is a plan for new guidelines next year to prevent “vertical slums” in the future.

Households by Type in Australia: 2010-2028

Australia-Households

Source: Euromonitor International from national statistics

Note: Data for 2015 onwards is forecast

A challenging economic landscape ahead

Accounting and consultancy firm PricewaterhouseCoopers (PWC) predicts that Australia could be excluded from the world’s 20 largest economies in 2050 as the mining boom cools down. In 2011, Australia was ranked the 17th largest economy in the world, according to PWC, whose consulting economics and policy leader, Jeremy Thorpe, warned: “Other countries are growing in population and they’re going through that urbanisation cycle. Australia really needs to have a long-term plan for innovation and invest in STEM: science, technology, engineering and mathematics”.

 

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