Will cautious consumers rein in early 2023 spending?

cautious consumers 2023
Shoppers are making considered purchases. (Source: Bigstock)

Grant Thornton’s retail industry group reports the Black Friday weekend revitalised consumer spending and in-store shopping. However the level of spending was well below expectations.

Sales data shows Australians spent $4.97 billion in global sales, but the forecast was $6.2 billion.

Tyson Dujela, Retail Industry Group partner, said customers are searching seeking value for money as household discretionary spending becomes tighter.

“We saw shoppers bring forward their Christmas spending to November, leveraging promotional activities. Consumers are making increasingly considered purchase decisions for bargains to save in the long run,” he said.

According to the data, the average basket price over a Black Friday weekend rose from $163.28 per transaction in 2021 to $167.99 this year.

There was a 29 per cent increase to in-store point of sale – or offline, bricks-and-mortar sales – compared to 2021.

“This shows consumers still want store experiences as they create an engaging, touch and feel, customer service driven retail experience with the instant gratification of buying products in person,” said Dujela.

Consumers will maintain their cautious habits

The trend our retail industry group saw of consumers returning to stores isn’t to say that the online experience isn’t just as important. In this era of omnichannel retailing, retailers need to provide a consistent experience across all touchpoints – spanning from online channels to stores.”

Similarly, Salesforce’s Connected Shoppers Report shows poor customer experiences can be detrimental to businesses, with 80 per cent of shoppers abandoning a retailer after three bad experiences.

Consumers are now more cautious with their spending as inflation, rising interest rates and impacts on the cost of living are front of mind.

“We predict shoppers of high-end retailers may start going to more affordable stores if businesses don’t put measures in place to retain customers. Consumers are projected to reduce discretionary spending, prioritise essential goods and discount options,” said Dujela.

Shoppers are also increasingly conscious of making sustainable purchase decisions, considering values and businesses impacts on the planet and communities. However, expected changes to discretionary
spending may influence increasingly price-sensitive consumers to prioritise price over responsible purchases.