Shifting retail – the new norm?

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South Australians are spending more with supermarkets, direct from local producers and pharmacies, and continuing to spend less than usual in cafes and restaurants, department stores and electrical goods according to the late August early September Square Holes mind and mood survey. The data illustrates that while spending continues to be generally be below pre-covid levels, there are positive trends across categories, yet signs that many South Australian businesses will be struggling.

Overall, South Australians believe they are spending less than usual, with 50+ year olds spending net less (i.e. more than usual minus people spending less than more) and younger South Australians more likely to be spending above usual levels.

From the Square Holes research, particularly large declines in spending for 50+ year old South Australians are in cafes, restaurants and catering (net less around 50%), furniture, floor coverings et cetera (net less 30%+), electrical goods (net less 30%+) and department stores (net less around 40%).

In contrast South Australians aged 18-34 are illustrating particularly strong spending growth in takeaway (net more than usual 31%), and supermarkets (net more than usual 19%).

When comparing spending with findings from the April survey, improvements are noted across categories. The survey illustrates  spending remaining below pre-COVID, improvements are observed across all categories. Spending in cafes and restaurants, furniture and houseware, electrical goods and departments stores continue to illustrate significant net spending of less than usual, yet the trend is less dire than April. For example, cafes and restaurants indicated a net 59% of less spending in April and an improved 26% less than usual in August.

Direct from local producers also appears to be improving. From the current survey there is a strong shift towards buy local across age groups, with the strongest shift for 65+ year olds with a net less of -13% in April to a net more than usual of 14% in the current survey. The shift to local was also strong for 18-49 year olds and improved for 50-64 year olds compared with April.

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With a continued preference towards in-store / and in-store retail, products such as takeaway, supermarkets and pharmacies have growing preference towards online – takeaway 44% online, supermarkets 27% and growing and pharmacies 22% and growing since April.  Newspaper and book retailing, clothing and electrical goods are also strong for online, whereas hardware, cafes / restaurants and direct from local produces currently have a preference skew towards face-to-face.

Click & collect appears from the August and April Square Holes as having comparatively low levels of usage and a generally flat trend line in adoption.

It is interesting to observe age differences with 18-49 year olds more predisposed to purchasing online …

Supermarkets

  • 18-34 27% online (of those spending more than usual)
  • 35-49 33% online (of those spending more than usual)

Takeaway

  • 18-34 55% online (of those spending more than usual)
  • 35-49 38% online (of those spending more than usual)

Clothing / footwear

  • 18-34 45% online (of those spending more than usual)
  • 35-49 37% online (of those spending more than usual)

Department stores

  • 18-34 24% online (of those spending more than usual)
  • 35-49 32% online (of those spending more than usual)

Similar age patterns existed when widening the survey sample to all respondents, i.e. not only those spending more than usual in the category as reported above.

There is indication that purchasing direct from local producers is on the rise, with preference typically in-store / in-person across age groups. Is this the nature of the purchase or that local producers are currently not viewed as offering adequate online offerings? Or, that good old-fashioned bricks and mortar stores have a valuable role in our lives?

With South Australian retail beginning to recover according to Australian Bureau of Statistics and other figures, some retail segments are getting more of a boost than others.  According to the latest ABS figures for July, online sales in Australia rose 73% compared with July 2019.  We are living through a fundamental shift in retail in South Australia and beyond and it will be interesting to observe trends moving forward.

How South Australian retail and hospitality responds to the changing environment will be key to future prosperity.  It is also critical for these sectors to be aware and adjust with demographic and other trends, consumer needs and how to best survive and prosper over the years to come.

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