Fashion retailers are likely to be cheered by research that claims the cautious spending habits of Australian consumers will peter out over 2011.
Colliers International's director of research, Nora Farren, recently studied Australian consumers to determine whether the “new conservatism” in spending was a long-lasting change or a more temporary “period of consolidation”.
“Consumers have basically not been behaving the way they have historically, which makes this recent phenomenon all the more interesting, and harder to predict," Farren said.
She and her colleague, Colliers International director of retail Nathan Clark, pointed to a number of factors to explain consumers' change in spending patterns. They were cyclical elements including consumers' increasing tendency to spend on non-retail sectors such as services and a 'recalibration' of spending in the wake of the federal government's 2009 stimulus payments.
“Consumers do have the capacity to spend more but temporarily lack the willingness to do so. The issues behind this are cyclical and expected to reverse over the course of 2011, as households start to spend more of their growing incomes after a period of financial consolidation,” Clark said.
He pointed to a “more stable” interest rate environment in the first half of 2011, “steady growth” in wages, a tightening jobs market and a “sustained recovery in household net worth” as factors that would encourage consumers to spend more as the year unfolds.
“The prospect of improved retail spending will also depend on product innovation and store developments to help lift demand,” Clark added.
“The key for retailers will be to provide the right sort of products, at the right price point, to encourage consumers to once again open their wallets.”
Colliers International is a real estate firm that operates in 61 countries across commercial, industrial and retail property. The Australian branch was opened in 1976 and regularly conducts research into the state of the local retail environment.