Australian consumers are optimistic about their buying habits over the next 12 months, and we are well ahead of the global average, despite a continued slump in global consumer sentiment. Our latest global Consumer Confidence Index report shows a two point decline in global consumer confidence to 96, as every region regressed slightly in the fourth quarter of 2014.
Despite overall Australian consumer confidence falling five points to 93 in the end of 2014, almost half (45%) of us say the next 12 months is a good time to buy the things we want and need. This number is up from 40% in the period in 2013 and notably higher than the global average of 39%.
This challenging consumer confidence outlook is fuelling the rise of ‘savvy shopping’ in Australia. Shoppers are prepared to shop around at different stores to find the best price – driving an increase in frequency of purchase, but also having the knock on effect of declining shopper loyalty. It almost perpetuates a vicious circle as supermarkets compete on price to try and retain shopper spending in their stores.
We referred to 2014 as the year of shopping around, and we expect this to continue in 2015.
The latest Nielsen HomeScan Consumer Panel data reflects this trend, with both basket size and trip frequency increasing. In 2014, average trips to the supermarket over a 12 week period increased from 27.5 to 28.3 peaking at 28.7 in September 2014, the highest it has been in at least two years.
We are shopping at more stores to seek out our favourite products, and moving into an age when you don’t have to buy everything you need in one big shop. Our savvy shopping behaviour means we are popping down to the shop more frequently than ever before.
Basket size also grew across all major grocery departments in 2014 with consumers steadily spending an increasing amount of dollars per trip. In the second half of 2014, average dollars spent per trip increased by 5% from $44.10 to $46.40.
We did see a small decrease in basket size over the Christmas break compared with 2013. However, the amount of trips we’re taking to the supermarket has increased; more than making up for this drop. Consumer confidence overall might be down, but our propensity to purchase isn’t.
The steady increase of average spend per trip since 2012 is a reflection of market forces including inflation, as well as retail influences such as an increase in promotional frequency and innovation in private label. We have more choices and lower prices across more categories. The result is that we may end up buying more items each trip. Our optimism for our ‘buying future’ is a result of a strong retail push for quality, innovation and value.
Despite this optimism, perception of positive local job prospects in the next 12 months continues to decrease and is now at 40%, down from 42% in the prior quarter and 45% in Q4, 2013. Also contrary to shopping optimism is a decrease in optimism about personal finances. Perception of positive personal finances in the next 12 months is at 53% – down from 57% in the prior quarter and 54% in Q4, 2013.
These competing trends mean the industry will continue to be challenged into 2015. Our work with retailers and manufacturers involves interpreting the sentiments of their consumers and applying the right strategies in order to manage their shoppers’ particular needs and wants. Australians are still carefully considering their future and the industry must do the same.
Globally, consumer confidence ended 2014 with an index score of 96; a decline of two index points from the previous quarter, which comes after several quarters of positive momentum. While confidence fell slightly in every region in the fourth quarter, the global index closed the year up two points from last year (94 in Q4 2013), and up from pre-recession level of 94 from Q3 2007.
The Nielsen Global Survey of Consumer Confidence and Spending Intentions was conducted Nov. 10-28, 2014 and polled more than 30,000 online consumers in 60 countries throughout Asia-Pacific, Europe, Latin America, the Middle East/Africa and North America. The sample has quotas based on age and sex for each country based on its Internet users and is weighted to be representative of Internet consumers. It has a margin of error of ±0.6%. This Nielsen survey is based only on the behavior of respondents with online access. Internet penetration rates vary by country. Nielsen uses a minimum reporting standard of 60% Internet penetration or an online population of 10 million for survey inclusion. The China Consumer Confidence Index is compiled from a separate mixed methodology survey among 3,500 respondents in China. The sub-Saharan African countries in this study are compiled from a separate mobile methodology survey among 1,600 respondents in Ghana, Kenya and Nigeria. The Nielsen Global Survey, which includes the Global Consumer Confidence Index, was established in 2005.