Shock result in retail spending study

Affluent Australian consumers are spending more with overseas retailers.

But the bulk of that spending is coming from bricks & mortar retailers while consumers travel – not so much online.

That’s the surprise finding of an analysis of spending habits by American Express which tracked two years from the first half of 2009 through to the first half of 2011. The research was provided by American Express Business Insights Asia, a new division of the global debit and credit card giant providing qualitative data on spending behaviour and trends to business customers.

AEBI found that there has been positive growth in spending by Australian Amex cardholders across all retail channels, both domestically and overseas.

While online and overseas channels are exhibiting higher growth rates, domestic bricks and mortar retail still captures the lion’s share of retail spend.

During the period, domestic bricks and mortar spending rose six per cent and domestic online by 13 per cent. Overseas bricks and mortar and overseas online both rose by 14 per cent.

The data is particularly interesting because it reflects the spending behaviour of consumers with average and above income levels – the type of consumer retail businesses most want to target because they have higher disposable income.

AEBI’s study focused on Australian cardmembers’ spending only, spanning apparel, department stores, electronics, food, household goods and other retailing.

The study concluded that a shift by many consumers to overseas bricks and mortar retailers was partly due to the strong Australian dollar which also encouraged overseas travel. It suggests consumers are deferring spending on items like clothing until they travel overseas.

Domestic bricks and mortar retailers still account for 90 per cent of retail sales to Amex card members, with overseas bricks and mortar seven per cent.

That means just two per cent of spending on Amex cards by Australians is going through domestic online retailers and a mere one per cent to overseas online stores.

Over the two years covered by the study, domestic bricks and mortar spending by American Express cardmembers slipped just one per cent.

The bulk of the domestic online growth was in electronics – up 36 per cent – while 17 per cent of the increase in overseas bricks are mortar stores was on apparel.

The number of shoppers buying products online from Australian websites rose 34 per cent, and the average number of transactions per consumer rose 18 per cent. But when it came to overseas online spending, there was an 18 per cent rise in the number of shoppers and a 29 per cent rise in transactions.

The number of consumers shopping overseas bricks and mortar stores rose 18 per cent.

Perhaps most surprising, however, was a comparison between the behaviour of Australian shoppers and those of other key Amex markets Great Britain and Japan.

The “overseas effect” was uniquely Australian, the study found.

While overseas spending by Australians in either physical stores or online rose 14 per cent, there was no movement in Great Britain and a two per cent decline in Japan.

Domestic online purchasing rose 35 per cent in Britain, 31 per cent in Japan, but only 13 per cent in Australian.

By contrast, domestic spending in bricks and mortar stores rose six per cent in Australia, two per cent in Britain and remained stable in Japan.

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