Luxury recession for Australia?
Nearing the end of a very busy week. Hoping for time to devote to long, ranting posts soon! But I was having some down-time last night, watching TV and up popped this ad that intrigued me. A kitchenware store in Sydney was having a “sizzling sale” – prices slashed. What caught my eye was how much slashing was going on – a set of four Scanpans (which is a pretty expensive brand here in Oz), which were AU $1395, were now at the bargain basement price of $395.
Now, of course this makes you realise just how much of a mark-up these stores whack onto an item but it also got me thinking – with so many “sizzling Recession sales” going on, will we tolerate price hikes when the Recession lifts? We are now used to low interest rates, 50% off sales or two for the price of one deals. People are looking at buying a house but are hoping for a fire-sale because the owners might be having trouble paying the mortgage.
Australia appears to be living up to its reputation as the “lucky country”. Our economy expanded in the March quarter by 0.4 of one per cent and Aussie shoppers have declared the Recession is kaput, over. I’m not so sure about this. The March growth quarter busts the two straight quarters of a shrinking economy, which is the textbook definition of a recession. But our unemployment rate is rising (and this is surely how Australians will judge whether we’re in a Recession or not – it is projected to rise to 8.5% in 2010/11) and our imports collapsed by $5.3 billion (which points to a continuing decline in business investment). But our exports were up thanks to resource-hungry China.
Australians have always had the “she’ll be right, mate” attitude without worrying about the future. So I wondered what Australians are actually spending on because I’ve pulled my horns in and am certainly not spending as much as I used to (we even gave Foxtel the flick – cable TV).
I browsed some ads, had a look at some retail websites and took a spin around the shops. And what stood out for me is that advertisers and shops here aren’t really acknowledging the Recession – it’s business as usual. The only one doing that is Kia with its ad campaign that if you lose your job within one year of buying a car, Kia will cover car repayments. I read somewhere that advertisers in the UK and US are acknowledging the times with “Recession busting” clearances and ads that hark back to better days and provoke nostalgia.
We seem to be better off than this time last year due to lower home loan interest rates (average saving of $800 per month), lower petrol prices and all the sales.
So we’re spending on:
- houses: 30% of housing sales come from first-home buyers thanks to the Government’s increased first-home owner grant;
- alcohol - can you imagine Aussies giving up the plonk?
- there appears to be 7 trends in our food buying habits - More bulk buying and bulk cooking; buying home brands over name brands; cutting back on meat or buying lesser cuts of meat; using vegetables as a money saving substitute to meat; planning purchases to avoid impulse buys; greater price awareness and price comparison; eating less takeaway. I confess to doing most of these 7 cost-saving strategies and I don’t think it’s a bad thing if we are all cutting back.
We’re not spending on:
- luxury designer items - seems that the Castlereagh Street strip of designer brands in Sydney is taking a battering with some shops saying they have not served a local customer in six months;
- many of my friends are not renewing their gym membership or taking out travel insurance;
- Australian-made goods - only 28% of customers surveyed thought buying Australian was necessary and felt that talk of a Recession led them to be more cost conscious. Sadly, imported goods are often cheaper than domestic.
Meanwhile the rest of the world (who Australians are told are far worse off than the lucky country) are spending on items to help them escape the Recession blues:
- condoms: well, if we’re staying home more, eating family meals and watching TV or DVDs, there’s more time for stress-relieving activities!
- seeds: there’s a shift to growing food so the purchase of seeds is on the rise (just make sure they’re not transgenic seeds);
- McDonalds: it’s cheap food so cash-strapped people are buying it;
- pets and pet services: pets are great recession busters when it comes to lifting your mood and the pet industry is expected to gross US $51.6 billion in 2009;
- junk food: again, it’s cheap so sales in doughnuts, chips and other junk food is up, with Krispy Kreme reporting a 56% rise in stock prices. I can’t begin to imagine the long term health costs that will arise out of eating more junk food.
- iPhones and Blackberries
- Romance novels: revenues for Harlequin books were up 13.5% in the first quarter of 2009.
- Silly movies: another stress-relieving activity.
- Yoga: there’s a huge growth in discounted or “pay what you can” yoga classes;
- Lotteries: I had great plans for the AU $106 million I was going to win in Oz Lotto. Sadly, I didn’t win, so I’ll have to shelve my plans to buy a luxury pad in New York.
And worldwide it seems that we are snubbing everyday “premium” products like Starbucks coffee (never drunk it anyway, sorry Americans, you can’t make good coffee); gourmet ice-cream brands; and luxury take-home meals like you can buy at Marks and Spencer in the UK. Instead, we are buying generic, no name brands and buying only basic items.
There’s the predicted rise of a new class of shopper – “value seekers” or “savvy shoppers” – who will not be afraid to boast about the lengths they go to in finding items that offer better value than higher priced ones. Following my recent visit to St Vinnie’s, I have decided to join the ranks!