What can business leaders learn from the latest quarter’s data from CommBank iQ, which shows Australians are continuing to make spending trade-offs? The insights offer more than just a snapshot into consumer behaviour and can help businesses make informed decisions.

Business leaders may be surprised to see the significant variance in consumers’ spending depending on where they live in Australia and how old they are. 

“When we look at consumers’ spending patterns across Australia, we can see that the national average spend per capita grew 2.2 per cent in the quarter to June 2024, compared to the same quarter last year,” says Makenna Ralston, CEO of CommBank iQ, a joint venture between CommBank and analytics company Quantium. 

“But if you break it down by geography, there are some interesting dynamics at play. Total average spending growth in Western Australia was much higher, at 3.9 per cent – the only state to outpace the 3.8 per cent growth in the consumer price index over the same period. 

“At the other end of the spectrum, average spending in Victoria grew just 0.7 per cent. The ACT and NSW were not much further ahead, with growth below the national average at 1.3 per cent and 1.7 per cent respectively.”

So, what’s driving this variance? 

Ralston says more clues are revealed by a deeper dive into the data – which is based on an analysis by CommBank iQ of de-identified transactions from approximately 7 million Australians. She says the breakdown of spending on essentials versus discretionaries is particularly informative, essentials being broadly things that can’t be avoided – such as groceries, insurance, medical costs, utilities and transport – and accounting for just over 50 per cent of the average household budget, while the rest is the discretionary “nice to haves”, such as travel, eating out, apparel and leisure.    

“Typically, you expect spending on essentials to be similar across the board, and broadly that’s been the case. The big difference can be seen in discretionary categories. In both Victoria and the ACT, discretionary spending went backwards during the quarter, and in NSW it just scraped up by 0.2 per cent. In all other parts of the country, discretionary spending grew above 2.5 per cent.” 

Per capita spending on eating out, for example, was up four per cent in WA, but declined by almost one per cent in Victoria. Likewise, household goods spending was up four per cent in NT, but down almost four per cent in ACT.  

Ralston speculates that the variance in NSW, ACT and Victoria could relate to the relative cost of housing in those parts of the country. “Putting a roof over your head takes a significant chunk out of your household budget,” she says. 

Slicing the data in other ways also reveals consumers’ age and life stage also correlate with significant variations in per capita spending. 

“The 18 to 29-year-olds continued to pull back their consumption, reflected in a 2.8 per cent spending decline – and this was led by significant falls in travel, apparel, eating out and entertainment during the quarter,” Ralston says. “On the other hand, growth in spending among those over 60 still outpaced CPI, with discretionary spending among this group up almost 10 per cent.”     

Among 18 to 29-year-olds, for example, spending on apparel dropped 11 per cent during the quarter, whereas it ticked up by six per cent among 70+ year-olds. 

For business operators, Ralston says these geographic and life-stage variances underscore the importance of looking beyond national averages when making operational and capital allocation decisions.    

“While there have historically always been spending differences between states, the divergence has become far more exaggerated since Covid hit and it doesn’t look to be smoothing out anytime soon.

“Relying on your own internal data could be costly when making decisions, such as where and how to direct marketing efforts, choices about geographic presence of retail outlets, what you stock, how much and at what price points.”  

Businesses are able to outpace their competitors when they take a truly holistic view of the people they are serving, she says, seeking to understand how customers interact with their business and how their customers are interacting with the broader world. “That’s a 360-degree view of a customer – and the gap between market leaders and laggards is becoming wider when businesses are capturing value using insights to see the whole story of their customers.”

The national average, she adds, “can hide a whole number of nuanced stories. You should ask yourself. ‘Do you really know what’s going on or are you prepared to take a risk on a decision without knowing the detail behind the headline average?’”  

Throughout the article, the change in average spending per capita compares the three months to June 2024 versus the same period in 2023. 

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Things you should know

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. You should consider seeking independent financial advice before making any decision based on this information. The information in this article and any opinions, conclusions or recommendations are reasonably held or made, based on the information available at the time of its publication but no representation or warranty, either expressed or implied, is made or provided as to the accuracy, reliability or completeness of any statement made in this article.

• CommBank iQ is a joint venture between the Commonwealth Bank of Australia ABN 48 123 123 124 and The Quantium Group Pty Ltd ABN 45 102 444 253.