Retail on the wrong end of household spending shift
Australian households are spending more on food, transport and recreation than they have in the past and reducing retail spending, according to Commonwealth Bank’s new Household Satisfaction Index.
Of the $57,000 that the average household spends per year (excluding rent and mortgage payments), over 22 per cent goes to food, over 17 per cent goes to recreation and over 10 per cent goes to transport.
Clothing, general retail and household furniture and equipment – the most obviously retail-related categories measured by CommBank – collectively eat up around 13 per cent of total household spending each year.
While this breakdown has remained relatively constant over the past few years, according to CommBank, there has been a slight increase in the share of spending going to food, transport and recreation.
“The offsetting reduction was in retail-related spending,” the report stated.
CBA chief economist Michael Blythe said that while the spending data suggests most Aussie households are in a “relatively comfortable position”, surveys reveal that many households think they have missed out.
The report cited a recent CEDA (Committee for Economic Development of Australia) study on attitudes to economic growth and development, which showed that 44 per cent of individuals believe they have not gained anything from Australia’s 27-year run of uninterrupted economic growth. And a further 40 per cent think they have gained only a little.
“One implication is that household satisfaction depends on more than just the hard-edged financials,” the report stated, citing factors such as civic engagement, social connections, health and work-life balance as being part of the mix.
These findings seem to be in line with a growing focus on experience and meaning in the retail sector. Many brands are rethinking the role that they play in the lives of the customers and striving to move beyond a simple transactional relationship.
What does the average Aussie household look like?
- The average Australian household has 2.4 people
- The ‘productive group’ that drives economic activity and generates income is aged between 18 and 64 years
- The number of Aussies aged over 65 now exceeds those aged less than 18 years
- The average household has income of $90,000 and pays tax of $14,500 a year
- Spending, excluding rent and mortgage payments, is around $57,000 a year
Published 13th November 2018