The findings, garnered from studies with data collection and research specialist Research Now and retail consultancy Shopworks Science, encompassed over 800 consumers from across Australia. With over 50 per cent of respondents planning to spend less and over 45 per cent planning to save more, the research showed a clear trend towards saving and paying down debt rather than spending, ARA executive director Russell Zimmerman confirmed.
“Sobriety really is the new black. Since the GFC and throughout 2010 value-seeking consumers looking for sensible purchases meant tough trading conditions for retailers and this trend is expected to continue in 2011 and beyond.
“2011 will have its own set of challenges as electricity prices soar and flood affected crops bump up the prices of fruit and vegetables. Over 45 per cent of consumers said the increased cost of living in 2011 would tighten their budgets.”
“New taxes have also spooked consumers, with 30 per cent saying they will spend less due to the anticipated flood levy.”
“Paying off debt will also continue to be focus for prudent shoppers with a third of consumers planning on paying more than required off their credit card debt and almost 20 per cent will pay more than their minimum mortgage repayments.
“The news that retailers can expect another tough year comes after Christmas sales failed to meet predictions of 3.5 per cent year-on-year growth, with sales over the six week 2010 Christmas period only two per cent higher than the year before.
“Our advice to retailers is to try not to rely on heavy discounting alone to get consumers spending – shoppers need to see real value in whatever they are buying. Find out what your customers really want, communicate with them, get online, embrace multi-channel strategies,” Zimmerman said.