Australians have found a new spending obsession, moving away from hoarding supermarket groceries and bottle shop booze to nesting and do-it-yourself (DIY) items.
Spending patterns have been constantly changing during the restrictions and lockdowns, and according to Commonwealth Bank’s Global Economic and Markets Research team’s latest credit and debit card spending analysis, the home improvements sector continues to be spent on by Australians.
CBA’s latest spending analysis for the week ending Friday, April 3 highlighted that while Australians appear to be spending less overall, they have been spending more on DIY and home improvements. The analysis also concluded a sharp fall in spending on services, with both food and alcohol sales declining in recent weeks.
According to the bank’s head of Australian economics, Gareth Aird, over the last three weeks overall spending has plummeted. The company has described it as a “massive fall”.
“It is simply not possible for households to spend on a range of goods and services when the businesses that provide them are shut,” he said.
“The appetite to spend on some goods and services has abated as households seek to avoid face-to-face interaction where possible, with medical and health services spend a case in point.”
All states in Australia are showing a consumer slowdown, with Victoria and New South Wales experiencing the biggest annual declines in debit and credit card spending.
CBA Senior Economist Kristina Clifton said that some of the spending patterns that emerged early on in the period of restrictions and lockdowns are now reversing.
“While food spending is still up around 4% compared to a year ago, people may now feel they have enough grocery items in reserve. Spending on food fell by 12% over the week, following a 21% fall from the previous week.”
The food segment is only up 6% due to a 38% downturn in sales from cafes and restaurants, although switching to takeaway has been able to bring up the food sales.
Even though shoppers are still buying up big at supermarkets, it’s at a much lesser rate than previous weeks. Just over three weeks ago, in late March, grocery sales were 40% higher than the same period last year. Currently, it is down to 28% which is still above the usual for last week.
This also applies to bottle shops as they were up a massive 86% annually just three weeks ago, as Australians panic bought in anticipation of liquor stores being closed. As they have been allowed to stay open, spending is now at a lesser 23%.
“Consumers may feel like they have enough alcohol stocked up and the fact that many businesses are pivoting to build digital businesses and implementing contactless delivery services may be providing further reassurance. Restrictions on activity have also been ramped up and people are no longer allowed to socialise with those that they don’t live with. There will be fewer barbecues, parties and other social occasions,” said Ms Clifton.
However, what Australians are happy to spend on is household furnishings and equipment. This segment includes furniture but also just about anything for the home, from TVs to paints and plants. This is good news for the likes of Bunnings, Harvey Norman and JB Hi-Fi which have seen an increase in sales.
The CBA said in a media release that Easter usually drags down the sales in the household furnishings segment, but the sales were up 20% with Australians wanting to continue on sprucing up their home and buying tools and materials for DIY projects.
However, according to Ms Clifton spending on DIY and renovations remains strong.
“Although spending on household furnishing and equipment was down 7% on the previous week, compared to the same week last year it is up 20%,” said Ms Clifton.
Bunnings is reported to have seen massive growth in its garden category over the last three weeks. Meanwhile, JB Hi-Fi reported a rush on home technology, with people sprucing up their work from home setups or buying gaming consoles.
However, as this segment begins to rise, the two biggest drops have been in clothing and personal care as people appear to not see the need to be buying new clothes if they are staying at home. The sector took a respective 61% loss over the past few weeks.
As companies have now shut their physical doors, including Myer, H&M, Zara and Sephora, customers are being pushed towards their online storefronts.
Commonwealth Bank’s Mr Aird said he didn’t see things improving for some time.
“Despite the incredible fiscal and monetary policy packages, we do not expect to see a rebound in our spending data for the foreseeable future.”
Words by Ece Demir
- News.com.au Coronavirus has people buying home improvement items over alcohol, data shows
- CBA Media Release Aussies continue to spend up on home improvements
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