Below trend growth to continue
Businesses are having to adjust to a new kind of consumer, but it remains unclear which behaviours and sentiments will stick.
The NAB Consumer Anxiety Index fell to 55.6 points in the final quarter of 2020, down from 57.0 in the previous quarter and 57.7 at the same time in 2019. This was the best result since mid-2019.
Lower anxiety reflected a significant fall in concern over government policy, (down 4.1 pts to a survey low 56.6). With employment conditions improving, consumers also worried less about their job security (down 2.2 pts to 48.0, but still treading above the survey average of 46.7). The cost of living continues to add most to overall consumer stress, but it also dipped (to a survey low 59.9). Groceries and utilities continue to add most to cost pressures according to consumer perceptions.
With the number of active COVID cases remaining low and growing confidence in the ability of the healthcare system to cope, the level of concern over the virus also continues to fall. And with the recovery from the pandemic-driven recession now well underway, the general level of concern over the domestic economy also fell sharply.
NAB Head of Behavioural & Industry Economics Dean Pearson said, “While consumers are feeling less anxious, less worried about COVID-19 and less concerned about the economy, they are continuing to embrace some new purchasing attitudes and behaviours that emerged during the height of the pandemic.”
Australian consumers are being more mindful where they spend their money, are more likely to research brands and products before purchasing and where possible, are switching to less expensive products to save money. While improving, on balance, consumers are also still showing some reluctance to visit major shopping centres.
“Consumer support for local businesses also remains strong, presenting opportunities for Australian SMEs to capture share as consumers embrace community shopping”, said Mr Pearson.
The most important behaviour shaped by the pandemic, purchasing online, also continues, including for items previously purchased in store. But as consumers return to work and restrictions ease, many are expecting to adopt change less aggressively than previously anticipated.
“While it remains unclear to what extent these new behaviours become entrenched, the rapid evolution of digital looks set to continue”, said Mr. Pearson.
Even before COVID-19, bricks-and-mortar retailers were facing growing competition from more established digital retailers.
“These challenges have clearly accelerated as the lines between physical and digital dissolve.”
Consumers are becoming more careful, informed, more sophisticated and more demanding in their shopping interactions and are likely to be less tolerant of sub-standard shopping experiences, both digital and in-store.
For further information, please read the NAB Australian Consumer Anxiety Survey Q4 2020
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