Insights

Budget Upset? Aussie Consumer Confidence Up and Online Shopping continues to Surge
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Budget Upset? Aussie Consumer Confidence Up and Online Shopping continues to Surge

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This month’s Federal Budget announced that the introduction of the Goods and Services Tax (GST) on digital purchases from overseas retailers will hit the majority of Australians who are increasingly shopping online as a result of surging optimism for their financial future.

Our research shows that 60% of online Australians shop online at least monthly, and over a quarter (26%) shop online at least weekly. This number is a huge 20% increase on monthly online shopping from 2014, and demonstrates a growing love of online retail and savviness in seeking out competitive prices online.

Leading categories for online shopping include fashion, DVDs/movies, books and beauty items; many of which are offered by overseas retailers. In fact, while the majority (93%) of Australians purchased from local online retailers in the latter half of 2014, 40% of online shoppers also purchased from US online retailers.

Treasurer Joe Hockey has signalled that the “handful” of businesses engaged in the majority of digital technology transfers would be asked to impose the GST at the point of sale. While initial coverage will only include digital products such as music and movies, other goods will be included in the coming months.

The widespread online shopping trend echoes an increasingly confident Australian consumer. Nielsen’s Australian Consumer Confident Index is continuing to surge, reaching 95 in the first quarter of the year; up six points from 2014 and up two points from the previous quarter.

45 percent of online Australians believe it is a good or excellent time to buy the things they want or need, up four percentage points on 2014. Likewise, close to six in 10 (57%) have a positive outlook on the state of their personal finances, up two points from quarter one, 2014.

Job prospects are also on the rise, with 38% of Australians feeling positive about the next 12 months, up four percentage points on 2014 and two points from the previous quarter.

So, while we expect the changes to the GST will affect most Australian consumers, we don’t predict this will greatly affect their decision to buy from these retailers. The Australian consumer is exhibiting a large appetite for online shopping for the convenience, extended choice and cost saving factors. This will continue to grow, particularly for a time-poor, hardworking community.

Having said that, that 10% difference could be the deciding factor between going with one retailer over another, and the psychological effect of knowing the tax exists for these retailers could see consumers buying locally more often. We are also seeing in this report that 62% of Australians have changed their spending to save on household expenses, so despite optimism, there is still a movement towards being more frugal.

The Australian retail landscape is changing just as all markets are; we’re predicting that online retail for grocery and food will reach 4% by 2020 for example. Retailers are looking at different ways to assist consumer’s penchant for online shopping of groceries with offerings like Click & Collect as well as wider networks for delivery services. We will continue to experience change as long as consumers have an appetite to adopt new ways to purchase products.

About the Nielsen Global Survey

The Nielsen Global Survey of Consumer Confidence and Spending Intentions was conducted Feb. 23 – March 13, 2015 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 behaviour 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.

Download the full report here