The Australian Centre for Retail Studies has just released its 2010 Australian Consumer Trends Report. Assia Benmedjdoub selects extracts from the fascinating 100+ page secondary research paper – and spotlights Ragtrader’s coverage of key trends.
The Australian Consumer Trends Report aims to provide retailers with an insight into emerging consumer patterns using local and international data. This year, the report identified six key consumer clusters: The Value Consumer, The Busy Consumer, The Green Consumer, The Local Consumer, The Bored Consumer and The Digital Consumer. Ragtrader zeroes in on four trends that relate directly to the Australian fashion market.
The Value Consumer
Due to increased financial pressure as a result of the global financial crisis, consumers are spending their money more carefully and in many cases, choosing not to spend at all. Shopping has become a more mindful process, with many taking into consideration what they need rather than what they want. Consequently, shoppers are spending ‘smarter’, presenting brands and retailers with the challenge of understanding the changing value equation for their consumers.
Value Consumer points:
Recycled fashion: In line with increased awareness of environmental and ethical concerns, as well as the need to cut budgets, consumers have embraced clothes swaps and second-hand clothing outlets. Clothes swapping has gained a significant following from shoppers, who are thinking outside the box and finding an alternative to passing on clothes to family and friends or donating them to charity.
In 2005, RMIT fashion academic, Kate Pear, started up a clothing swapping night called The Clothing Exchange. What started as a small monthly get-together in central Melbourne has spread to Sydney, Adelaide and Brisbane, with crowds of up to 150 people at each event. Each person attending The Clothing Exchange is required to bring along a maximum of six items of clothing that they are ready to give away. For each item, the participant receives a button, which they can use to ‘purchase’ something contributed by someone else. Remaining clothes at the end of the night are donated to charity.
The lipstick effect: While spending on big ticket items has slowed, consumers are turning to small indulgences. Australian Bureau of Statistics data for December 2009 revealed that the cosmetic sector experienced growth of 9.4 per cent, significantly higher than the three per cent growth experienced by the overall retail industry.
Best price: Shopping comparison sites, or price engines, allow online consumers to see lists of prices for specific products, thus enabling them to get the best deals on the product or service they are looking for. In 2009, Australia’s leading comparison shopping website, GetPrice, reported its biggest month to date, due to the growing number of Australians researching online before they buy.
Fast fashion: Recent years have also seen a rise in the number of consumers looking for alternatives to runway fashion that are both inexpensive and fashionable. Retailers such as H&M, Topshop, Mango and Zara have responded to such demands by following a strategy known as fast or disposable fashion. Characteristics include a fast speed to market and limited production of each product line. Consumers are attracted to the combination of these propositions, which create a sense of exclusivity in the purchase without requiring a large expenditure, while generating a sense of urgency in the purchase, given the limited stock availability.
In more detail:
Generational differences in retail spending
While it is evident that the GFC has had a broad effect on spending, not all consumers have responded in the same way. Spending among younger consumers, particularly Generation Y, has remained much higher compared to other age groups. Gen Y is responsible for more than a third of Australia’s consumer credit defaults, despite making up only 20 per cent of the credit-active population (Herald Sun, 2009).
A 2008 survey of 1230 Australians by management consultants The Leading Edge found that 31 per cent of Gen Y increased the money they spent compared to the same time the previous year. This is not particularly surprising given that the number of Gen Y members living with their parents has jumped by 30 per cent in two decades due to rising property and rental rates (Courier Mail, 2008). It appears then, that with no mortgage and no dependents, Gen Y has had little reason to change their spending habits.
On the other hand, research suggests that Baby Boomers have feared the slowdown.
According to a global study by international research agency TNS, 71 per cent of Baby Boomers cut back on spending and just over half (52 per cent) say it is unlikely that they will save any money in 2010 (Dynamic Business, 2009).
Unlike Gen Y, Baby Boomers do not have much time to make up for any losses during the economic downturn and are choosing to invest heavily and take few risks, rather than spend. The survey also found 44 per cent of Australian prospective retirees are postponing their retirement, while four in 10 plan on working more to increase their income over the next 12 months in response to tougher economic conditions (Perth Now, 2009).
Like the Baby Boomers, Generation Z (individuals born between the mid-1990s and the late 2000s) seems to have also adopted a thrifty approach to the slowdown, with research showing that 12- to 18-year-olds are relatively cautious about their spending.
A survey of 2000 teenagers by Australia’s largest credit file bureau, Veda Advantage, and social network site Habbo, found that nearly 70 per cent worry about money, most have a savings account and plan to pay for their own cars, education and house. Australian teenagers also have strong convictions regarding the payment of bills on time and not owing money, even if it is to their parents, with 64 per cent never having missed a mobile phone repayment and 67 per cent saying they do not like to owe money (Campion, 2009).
Researchers believe this conservative approach to money was in part formed by the past 18 months of financial hardship from the GFC and, as a result, Generation Z is putting their quality of life ahead of immediate materialistic goals.
The busy consumer
In an increasingly time-poor society, consumers are turning towards more convenient lifestyle and retailing options. In support of this trend, IBISWorld statistics show the Australian convenience store industry experienced estimated growth of 3.6 per cent in 2008/09. However, this desire for convenience is not exclusively limited to such stores, with
consumers expecting more convenient and time-efficient processes, locations and store layouts from all retailers in an attempt to balance the many competing tasks they face today.
Busy Consumer points:
There are no queues online: According to a recent survey by Visa e-Commerce, 79 per cent of Australian consumers are shopping online and 83 per cent are likely to make a purchase online in the next 12 months. A survey conducted during 2008 by online-payment company PayPal found that the main reasons why consumers shopped online were to get better value (68 per cent of respondents), to avoid crowds (65 per cent), to avoid queuing (48 per cent) and to have access to a wider range of products (46 per cent).
Mobile ease: According to US technology research firm Gartner, 1.2 billion people globally will carry handsets capable of supporting rich, mobile commerce applications by the end of 2012 (Chain Store Age, 2010). As reported by Marketing Charts (2010), nearly two-thirds (65 per cent) of mobile-commerce shoppers said they would make more purchases from their mobile devices if it were easier to find products from trusted retailers. Thirty-seven per cent of smartphone users said they made a purchase with their device in 2009.
Shopping with purpose: A steady stream of research has shown that consumers use the internet to search for product information before making their purchase through an alternative channel, such as a retail store. According to a study by business advisory firm Deloitte, 60 per cent of UK shoppers are using the internet more to research products before purchasing than they did in 2008 (Deloitte, 2009).
This compares with a study by Google (2009), which found that up to 47 per cent of Australians search online prior to purchasing in-store. The internet therefore has a significant impact on offline (in-store) consumer behavior.
In more detail:
Multi-channel purchasing behaviour
Over the past few years, multi-channel retailing has received growing attention as customers turn to a range of different channels in search of a more convenient shopping process – scanning catalogues, browsing websites, watching TV and visiting stores.
According to a study by global market research company Forrester (2010), more than 70 per cent of US internet consumers are now using multiple channels to shop. Research has found these multichannel consumers spend up to 10 times more, generate 25 to 50 per cent more profit and demonstrate greater loyalty than their single-channel counterparts (TNS Global Market Research, 2007).
Multichannel consumers are also more informed, experienced and demanding as to what product they want and the channel they prefer.
Offering multi-channel shopping facilities can therefore be considered a strategy for retaining customers that value convenience and flexibility. According to UK research company Ipsos MORI, 82 per cent of UK consumers want a multi-channel approach in shopping in-store, online and by catalogue and with no difference in service and experience between channels (Sterling Commerce, 2008).
As multi-channel consumers are engaged in more complex buying cycles, product information and customer service are of high importance, as well as product and brand consistency across channels. Therefore, the key to retailers gaining ground continues to be creating a seamless, positive customer experience across channels (IBM, 2007).
Today’s most experienced multi-channel consumers see shopping as a multi-step process, with the online and offline channels bringing distinct value at the different stages of the shopping process. Nonetheless, the traditional bricks-and-mortar store remains the primary sales and communication channel for the majority of retailers.
According to research by global management consultancy Accenture, 67 per cent of consumers state a preference for making purchases in physical stores to see, touch and examine the items they intend to buy before making a purchase (Retail Wire, 2007).
In fact, two-thirds of shoppers in the UK agree that browsing around a shop is preferable to home shopping, while 83 per cent of US consumers who buy products online still claim to prefer shopping offline to any other channel (Retail Conference, Valencia, 2007).
A related global study by Ipsos MORI found that, on average, 76 per cent of purchases across the globe are made in a store, which compares to 78 per cent in Australia (ESOMAR Retail Conference, Valencia 2007).
It is important for retailers to be aware that misalignment and inconsistencies across channels can result in lost customers and revenue, while positive experiences can deliver customer loyalty and profit (IBM, 2009).
The bored consumer
Consumers today are overwhelmed by choice, with an ever-increasing number of advertisements and promotions, each trying to be more creative and engaging than the last. Coupled with a rising number and variety of new retail concepts, many consumers have become de-sensitised, and even bored, with traditional retailing and advertising (MSNBC, 2009).
To combat this boredom and desensitisation, consumers are searching for a greater connection with retailers, and a more engaging retail experience both online and in-store. When faced with a multitude of similar stores, consumers will inevitably choose the one that is most in line with their wants, needs and brand preferences and desire for engagement and entertainment.
For retailers, this has placed increasing importance on understanding current consumer expectations and satisfaction, as well as experiential retailing elements.
Bored Consumer points:
Listen up: Audio branding is seen as a very cost effective way to create an entertaining experience for customers and source of differentiation for the retailer. For example, Australian fashion retailer Supre broadcasts its own radio show, complete with advertising pre-programmed into the music. This strategy allows Supre to choose songs that appeal to its target customers, creating an inviting environment and subconsciously alerting them to special promotions.
Massclusivity: Examples of this trend can be seen in fashion retailing, with the popularity of websites such as Threadless and Wooshka. These websites allow consumers to design t-shirts and upload them on the site. These are then voted on by other members and the most popular designs get released for sale.
However, those t-shirts that are released for sale have a very strict maximum quantity, commonly 500, guaranteeing rarity and uniqueness. Even the heavyweights have joined in, with Adidas launching a ‘mi Adidas’ custom-made shoe service.
Shoppertainment: Berjaya Times Square mall in Kuala Lumpur, Malaysia, demonstrates that ‘shoppertainment’ provides consumers with an opportunity to escape the boredom they feel with the traditional shopping experience, while also allowing them to satisfy their shopping needs. It boasts a 133,000 square foot indoor theme park, Cosmo’s World.
This entertainment centre takes up the top floor of one half of the mall, and the main attraction, the Supersonic Odyssey Rollercoaster, winds its way throughout the general shopping areas (Berjaya Times Square, 2009).
In more detail:
Engaging and entertaining technologies
Consumers are expecting changes to the in-store retail experience in terms of the use of emerging technology. A global study by TNS (2008), which asked consumers what technologies they expected to be using in-store by 2015, found that:
• 73 per cent expect to be able to use interactive touch screens in dressing rooms to communicate with shop assistants regarding size requirements;
• 60 per cent expect to be able to pay using only their fingerprint;
• 57 per cent expect 3D body scanning to tell them the ideal product and size; and
• 42 per cent even expect holographic sales assistants to be in full use.
While the exact preferences and expectations of new retail technologies differed greatly according to the country the respondent was from, the research demonstrates a clear trend of looking expectantly towards new retail technologies to improve or alter the way in which consumers experience and engage with a particular retail store.
Interactive mirrors, 3D scanners and even holographic sales assistants are beginning to appear in change rooms, making the shopping experience more enticing and inviting for consumers.
US department store Bloomingdale’s was one of the first retailers to test a social retailing system, enabling customers to share their shopping experience with friends or family through an interactive mirror and webcam.
Similarly, department store JC Penney trialled an interactive dressing room. Using inventory tagging, the fitting room registers the items shoppers are trying on and produces images of the merchandise. Shoppers can then send a URL to their friends and family using their mobile phone, directing them to a website that showcases the items being tried on and allows them to make comments (Forbes, 2008).
The Digital Consumer
Technological enablers, particularly the internet, have led to a new type of creative and connected consumer who spends a considerable amount of time interacting through different forms of media (Datamonitor, 2008).
Consumers are rapidly adopting new behaviors powered by Web 2.0 technologies including social networks, blogs, tags, ratings, user-generated content, news feeds, shared bookmarks, online photos and videos. Social media has also revolutionised the way in which people communicate with each other in their personal lives, how they do business, how they shop and even how they network with people across the world.
Digital Consumer points:
Don’t underestimate social media: It is no longer enough that a company has an online presence through operating a website. It is now a ‘participation age’, where interactive social media has given people more control over their media experience and consumption (Datamonitor, 2008).
According to a report by US social media services provider Ripple6, and e-commerce consultancy firm E-Tailing Group, shoppers buying products on the internet are most influenced by both online social networking sites and conversations with friends.
The survey, which drew on the responses of 1000 online shoppers, found that 46 per cent of e-shoppers find value in product recommendations from friends. More than four out of five online shoppers express interest in sharing information about their purchases with people they know, which affects commerce as pre-purchase opinions from others influence buying decisions for 74 per cent of online shoppers.
Additionally, 73 per cent agreed that “people like me” are the most trusted sources when making a purchase. Survey results also found that 65 per cent of respondents see value in connecting directly with other shoppers who bought similar products and would likely join such a retail community in order to help make smarter buying decisions.
In more detail:
Demographics of social media users
It is important for retailers to realise that social media is not a tool that is utilised only by youth, a stereotype that is commonly associated with mobile internet and social media. Although they remain the core group driving the trend, the reality is that social media is also relevant to a broad range of age cohorts (Datamonitor, 2008).
US website monitoring company Pingdom recently looked at the demographics of social network users and found the biggest group were aged 35 to 44, with those over 35 making up 57 per cent of users. Similarly, a report in 2009 by ACNielsen found that the leaders in mobile social networking activity are 35- to 54-year-olds, who accounted for 36 per cent of mobile social network usage in December 2009 in the US.
Close behind them were 25- to 34-year-olds, who performed 34 per cent of the month’s mobile social networking activity. Only seven per cent of mobile social networking activity was represented by 13- to 17-year-olds and only 16 per cent by 18- to 24-year-olds (Marketing Charts, 2010).
Women in particular have a strong presence within social media, with a recent study of US women by social media platform SheSpeaks revealing that 86 per cent now have a profile on at least one social networking site and 50 per cent purchase products because of information available on social networking sites (Marketing Charts, 2010).
Further, research conducted in 2007 by US internet statistics company ComScore found that there is a difference in the type of social networks preferred by men and women. Social networks solely offering the opportunity to communicate were most popular with females, while social networks offering interaction through video or photo sharing (such as YouTube and Flickr) were enjoyed more by males.
These statistics highlight the danger of making assumptions about customer behaviour and emphasise the importance of retailers understanding their target audience.
The value consumer: Ragtrader coverage
NATIONAL: Myer continues to push exclusive designer collaborations as a key point of difference from its rivals. The department store expands its Wayne By Wayne Cooper diffusion line to include accessories; its Maticevski line to include cocktail dresses and eveningwear; and positions its NF by Nicola Finetti line across 40 Myer stores.
Hi There by Karen Walker and Maticevski retail through select Myer sites only. All collections offer designer signature looks at mid-market price points. (Ragtrader, September 2009).
SYDNEY: Diesel Australia undergoes the biggest shake-up of its 20-year corporate history. The denim giant adopts an aggressive new pricing strategy aimed squarely at stealing market share from competitor – and rumoured category leader – G Star Raw. The multi-tiered roll out commenced during the spring/summer 2009 selling season, when Diesel discounted its men’s and women’s apparel lines by between 10 and 15 per cent.
For spring/summer 2010, prices drop by 20 per cent or more, bringing its top-end jeans down to $400 from their original $600 and its entry level denim prices from $290 to $199. (Ragtrader, July 2009).
MELBOURNE: Accessories wholesaler Coquette Red implements a raft of product changes following demand from retailers for lower priced collections. The changes roll out across Coquette Red’s summer 2010/11 range, and include an average 20 per cent drop in the price of its handbags. The label also expands its product line to include both synthetic and leather wallets and belts for the first time. (www.ragtrader.com.au, March 2010).
RAGTRADER ONLINE BLOG: Fashion leasing provider Love Me & Leave Me experienced strong growth during the financial crisis. Director Simonne Santana provides an insight into her business model: “I have always loved designer fashion but could never afford it. I began developing a concept which would give fashion-conscious females throughout Australia access to formerly unattainable premium fashion. After much brainstorming, in late 2005 the Love Me & Leave Me business model dawned on me. As I explored the fashion leasing concept, I discovered similar businesses operating in the UK and the USA. This gave me more confidence that the business model would work locally. Just over a year later, Love Me & Leave Me launched. As it stands today – three years later – it is the only online fashion leasing service where members can borrow the latest handbags, accessories, jewellery and dresses and have them delivered to their door, anywhere in Australia and New Zealand. I have watched my business move from a mere concept to a successful online business offering." (www.ragtrader.com.au, January 2010).
The busy consumer: Ragtrader coverage
NATIONAL: Quiksilver’s Nicholas Nathanson, who heads up e-commerce and online marketing for Quiksilver and Roxy in the US and Canada, reveals the importance of multi-channel strategies ahead of an Australian business tour.
His role incorporates website development, internet marketing and online merchandising, as well as managing outsourced call centres for customer queries and distribution. Through analysis of consumers’ online habits, the company found they were predominantly clicking on the product pages to research and plan purchases to make in-store.
To capitalise on this, the company created opportunities to link the online portals with physical stores. One example is allowing consumers to buy online and return in-store. “That activates people to participate in our store environment and potentially buy something else when they get to the store,” Nathanson says.
On the other hand, the company has online facilities in its physical stores from which consumers can order product for free delivery to their home. This proves helpful if customers want a size or product that has sold out in the store. (Ragtrader, March 2010).
MELBOURNE: The L’Oreal Melbourne Fashion Festival launches an iPhone
application that features its entire program of events, runway footage
and is integrated with its official blog, Facebook and Twitter page.
More commercially, it allows consumers to find retail stockists on a
Google map and access a GPS service that leads them straight there.
(Ragtrader, February 2010).
SYDNEY: After experimenting with pop-up stores, e-commerce fashion
community Grand Social prepares to launch a permanent bricks-and-mortar
retail space. Co-director Nick Gower says the store interiors will be
designed by furniture designer Tomek Archer.
It will stock independent Australian and New Zealand fashion designers and house an art exhibition space, photo shoot facility and offices for The Grand Social administration. The Grand Social is an e-commerce portal for independent brands. It offers a central website through which the participating designer’s collections can be viewed and then purchased. (www.ragtrader.com.au, April 2010).
The bored consumer: Ragtrader coverage
MELBOURNE: Sportgirl announces a new 750 square metre store at Chadstone Shopping Centre. The new store features a six-metre high entrance flanked with a prism-shaped window. Shoppers can watch ever-changing fashion fly by in the Nectar Suite, while a honeycomb pattern shoe display also plays a key part in the store’s design. Sportsgirl chief executive Elle Roseby says the super-flagship has purpose-built entertainment areas, with in-store performances alternating every few weeks. “This larger size gives us a lot more opportunity to provide a level of entertainment that customers haven’t been used to from Australian retailers before. Working with an international branding agency [Yellow Door] allows us to view life as an international retailer who knows where retail is heading.” (Ragtrader, July 2009).
SYDNEY: General Pants Co continues to win the hearts and wallets of Gen Y consumers, launching a record company named Major Label. The venture sees three undiscovered bands release a single through the record label each month. The single can be streamed through the General Pants Co website for no charge or purchased through providers like iTunes and Amazon for $1.68. Some 700 General Pants Co employees are involved in the process, recruiting new acts in-store and at local concert gigs. (Ragtrader, February 2010).
NATIONAL: Celebrity stylists Trinny and Susannah kick off a live styling tour of key Westfield shopping centres. The national tour starts in Sydney, before moving on to Adelaide, Brisbane, Newcastle and Melbourne. The two fashion experts mount specially constructed stages to show Westfield shoppers how to create looks to suit their body shapes. The events are free of charge and exclusive to Westfield shopping centres. (www.ragtrader.com.au, December 2007).
The digital consumer: Ragtrader coverage
NATIONAL: Cue, Saba, Aurelio Costarella and Antipodium were the most talked-about Australian fashion labels in social media in October 2009, according to a new trend forecasting service.
London-based agency Stylesignal, founded by Australian expatriates Geoff Watts and Julia Fowler, has developed a web-based software as a service (SaaS) product which automatically analyses opinions on trends as they develop through media platforms such as Twitter. Dubbed ‘Trend Science’, the system can break down key trends by region as well as garment types, prints, patterns, colours and detailing.
Users are presented with a top 20 list for each category and can search for particular terms to see how opinion has changed over time. For instance, a user who selects the search fields ‘womenswear’, ‘Australia’ and ‘label’ will see Cue ranked as the most talked-about brand in October, followed by Saba, Aurelio Costarella and Antipodium.
A monitoring function allows users to see developments within selected areas by setting alerts across blogs and Twitter sites. Watts, who has a background in computer science and IT, said the technology had been developed over a two-year period. (Ragtrader, November 2009).
MELBOURNE: Online measurement firm Hitwise recently undertook a study of domestic social media trends. Asia Pacific research director Alan Long answered some key questions in his research.
What are the leading online social networks in Australia?
In the week ending October 17, 2009, Facebook, YouTube, MySpace and Twitter combined made up 71 per cent of the industry. All were also top 50 websites visited by Australian internet users. Currently the number two website in Australia, Facebook’s growth puts it on a trajectory to overtake Google as the most visited website by domestic users over the coming months, most likely during the weeks immediately before or after Christmas.
How have fashion brands benefited from online social networks?
The number of upstream visits to ‘apparel and accessories’ (shopping and classifieds) websites from social networks has surged over the last three years. From November 2006 to October 2009, the number of visits to these websites from social networks grew by 85.7 per cent.
(wwww.ragtrader.com.au, December 2009).
To purchase the full report, contact the ACRS on: (03) 9903 2455