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Retail is back, but have your customers changed?

Retailers around Australia are looking again to a brighter future. With New South Wales-based retailers opening their doors to shoppers and Victorian businesses set to follow, the Australian economy is being prised back open just in time for a busy holiday trading period.

As restrictions ease, and consumers in Australia’s most populous states regain some basic freedoms, the recovery can now get underway. However, while retailers and consumers alike would be eager to put 2021 behind them, the research suggests recent events have yet again reshaped the way people shop and spend.

The new CommBank Consumer Insights research looks at the changes in the behaviours, attitudes, and intentions of more than five and a half thousand Australians over the past six months. It shows that some preferences are now more embedded than they were six months earlier, and others have started to reverse.

What happens from here remains uncertain, but picking up on signals about consumers’ current and future needs can allow retailers to create further momentum or adjust their strategies. 

Local economy at the forefront

It wasn’t just pandemic-induced restrictions that influenced the digital shopping activity of Australians. Yes, buying items sight unseen, the use of click and collect and ordering through online meal delivery services have edged up since January 2021, according to the research. However, consumers have also strengthened their support for local online retailers, with ‘shopping local’ the most prolific of the online activities we asked about. 

According to the Consumer Insights research, more than one in two Australians (52 per cent) are now purchasing more from Australian-based online retailers. This has increased since the beginning of 2021 and is almost two-and-a-half times higher than those spending more with offshore online retailers (22 per cent).

Our Consumer Insights research from earlier this year showed that this desire to ‘shop local’ also extended to locally sourced products. In January, the majority of consumers in most categories said it had become more important to buy products manufactured in Australia, 78 per cent believe that it is important for brands to support local communities.  

Emerging digital payments gaining ground

The use of emerging digital payment options has continued to increase since the pandemic took hold, particularly among online shoppers. Meanwhile, almost 60 per cent of Australians report using less cash, and both debit card and credit card usage has slowed.

While more than two in five Australians have used a mobile payment wallet to purchase goods or services, and 35% have used a buy now pay later service, this leaps to 58 per cent and 45 per cent respectively for online shoppers. 

When it comes to payments, the biggest change in frequency of usage among consumers over the past six months is buy now pay later, 35 per cent of consumers now use buy now pay later, with 38% reporting to use this payment method more frequently. This is an increase from 34 per cent reported six months earlier.

Not everyone yearns for a pre-pandemic shopping experience

The research shows that most consumers across categories intend to revert to pre-Covid-19 shopping habits after the pandemic recedes. On closer inspection, these intentions have shifted in the past six months, which may support the likelihood of more persistent preferences.

In the case of books, media, and gaming, 48 per cent of consumers say they are now unlikely to revert to the way they shopped pre-pandemic, up from 44 per cent six months ago. Shoppers in the consumer electronics segment reported a similar sentiment.

In other categories, namely fashion and motor vehicle parts, the opposite is occurring where more consumers intend to revert to in-store than was the case in January. For fashion, the proportion of consumers that are now likely to revert has climbed to 66 per cent from 61 per cent in the last six months. In Motor Vehicle Parts the shift is similar moving to 65 per cent of consumers compared to 59 per cent previously reported.

So, as the Australian economy reopens and with a roadmap set for deeper easing of restrictions in place, uncertainty can start giving way to positivity. If what we saw in late 2020 is anything to go by, the retail sector stands to benefit from pent up demand and substantial savings balances. 

As we look ahead, it’s worth remembering just how much consumer behaviours have changed and the impact that can have on their shopping preferences. Maintaining that deeper understanding just might help businesses move from capturing short term exuberance to creating longer-term loyalty and momentum. 

To access insights or learn more about how CommBank can support consumer businesses, visit commbank.com.au/consumer-insights

About the author: Jerry Macey is Executive Manager, Consumer and Diversified Industries, at Commonwealth Bank of Australia.

Things you should know:
The Bank believes that the information in the article is correct and any opinions, conclusions or recommendations are reasonably held or made, based on the information available at the time of its compilation, but no representation or warranty, either expressed or implied, is made or provided as to accuracy, reliability or completeness of any statement made in the article. Any projections and forecasts are based on a number of assumptions and estimates and are subject to contingencies and uncertainties. Different assumptions and estimates could result in materially different results. The article refers to data sourced from an online survey of 5,639 consumers. The survey was undertaken by ACA Research on behalf of the Commonwealth Bank. All analysis and views of future market conditions are solely those of the Commonwealth Bank.

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.

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