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Budget upset? New GST to affect majority of Australians as online shopping continues to surge

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Nielsen’s 1st Quarter 2015 Global Consumer Confidence Index shows increasing optimism
International e-commerce unlikely to slow

Sydney, Australia – 21 May 2015 – Outlined in last week’s Federal Budget announcement, the introduction of the Goods and Services Tax (GST) on digital purchases from overseas retailers is set to hit the majority of Australians who are increasingly shopping online as a result of surging optimism for their financial future.

According to Nielsen, 60 percent of online Australians shop online at least monthly, and over a quarter (26%) shop online at least weekly. This number is a huge 20 percent 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 percent of online shoppers also purchased from U.S. 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 percent on 2014. Likewise, close to six in ten (57%) have a positive outlook on the state of their personal finances, up two percent from quarter one, 2014.

Job prospects are also on the rise, with 38 percent of Australians feeling positive about the next twelve months, up four percent points on 2014 and two per cent from the previous quarter.

Head of Nielsen’s Retail Industry Group Kosta Conomos noted that the GST is unlikely to spook consumers: “the changes to the GST will affect most Australian consumers, however 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 is predicted to continue to grow, particularly for a time-poor, hardworking community.

“Having said that, that 10 percent 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 percent of Australians have changed their spending to save on household expenses, so despite optimism, there is still a movement towards being more frugal,” said Conomos.

“The Australian retail landscape is changing just as all markets are; we’re predicting that online retail for grocery and food will reach 4 percent 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,” said Conomos.

PEOPLE IN ASIA PACIFIC ARE MOST ECONOMICALLY CONFIDENT
Compared to the end of last year when all regional confidence scores declined, it was a more upbeat start to the year; as confidence increased slightly or remained stable in every region except Latin America. Compared to the end of last year when all regional confidence scores decline, it was an upbeat start to the year; as consumer confidence increased globally by one point to 97and increased slightly or remained stable in every region except Latin America.

Asia-Pacific posted the highest quarterly regional index score of 107, and consumer confidence increased in nine of 14 markets in the first quarter. Nine markets also remained at or above the 100-baseline level of optimism.

Among the world’s largest economies, consumer confidence increased most in Japan, rising nine points to 82 in the first quarter, which was the country’s highest score since 2005 when Nielsen’s consumer confidence index measurement began. Germany also reached a milestone: Sentiment increased two points to reach the baseline score of 100. Confidence also increased one point in the U.S. (107), three points in the U.K. (97) and three points in France (60). Conversely, confidence in China decreased one point to 106 from fourth-quarter 2014.

Globally, we’re spending less and saving more. Global discretionary spending intentions declined or remained steady in the first quarter across all lifestyle categories measured. Spending intentions for paying credit cards and debts (25%) and new technology products (24%) held steady from the previous quarter. Millennial respondents—especially those in the 25-29 age range—exceeded the global averages by as much 10 percentage points for these discretionary spending activities.

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ABOUT THE GLOBAL SURVEY OF CONSUMER CONFIDENCE AND SPENDING INTENTIONS
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 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.

ABOUT NIELSEN
Nielsen N.V. (NYSE: NLSN) is a global performance management company that provides a comprehensive understanding of what consumers Watch and Buy. Nielsen’s Watch segment provides media and advertising clients with Total Audience measurement services across all devices where content — video, audio and text — is consumed. The Buy segment offers consumer packaged goods manufacturers and retailers the industry’s only global view of retail performance measurement. By integrating information from its Watch and Buy segments and other data sources, Nielsen provides its clients with both world-class measurement as well as analytics that help improve performance.  Nielsen, an S&P 500 company, has operations in over 100 countries that cover more than 90 percent of the world’s population. For more information, visit www.nielsen.com

Press Contact:
Jackie Helliker, +61 403 074 864, jackie.helliker@nielsen.com