What’s New November-December 2010

What on Earth are you wearing?

In 2007 Directional Insights asked the question; what type of fashion are we purchasing? A survey was conducted that asked shoppers to nominate which fashion category they mainly purchase from. Four options were given including:

Inexpensive Everyday Fashion- Lower priced work or casual wear including Lowes, Millers, Suzanne Grae, Payless Shoes and Supre.
Mid Range Fashion- Affordable work or casual wear including Sussan, Portman’s, Mathers and Just Jeans.
Better End Fashion – More expensive, branded work or casual wear such as Cue, Rodney Clark, Nine West and Country Road.
High End Fashion – Expensive and exclusive designer label wear such as Polo Ralph Lauren, Saba and Lisa Ho.

But 2007 was a long time ago, and so recently Directional Insights asked this question again to find out just what people want to buy in 2010.

In 2007, Mid Range Fashion led the industry with 44% of those interviewed stating that they mainly purchased fashion from retailers like Sussan or Portman’s.

This was followed by 34% who purchased inexpensive everyday fashion, 17% who purchased Better End Fashion and 4% who mainly purchased High end fashion.

A lot has changed in the fashion wardrobes of Australians since 2007. The Global Financial Crisis has changed shopping habits in many ways, with scores of Australians embracing savvy shopping and passionately claiming that they will not be returning to their old habits any time soon.

In light of this, Directional Insights decided to renew its interest in fashion categories to determine if our fashion tastes have changed in the post-downturn world. A survey of n=1052 shoppers procured the following results:

Inexpensive Everyday Fashion was mainly purchase by 44% of shoppers, 43% mainly purchase Mid Range Fashion, 10% purchase Better End Fashion and only 2% mainly purchase High End Fashion.

Chart comparing 2007 fashion preference with 2010

2007 fashion compared to 2010

These results indicate that Inexpensive fashion has caught up with Mid Range and that retailers such as Supre and Lowes are now topping the fashion categories along with the Mid Range brands.

Fewer shoppers in 2010 are purchasing Better End or High End fashion, a combined 13% compared to 21% in 2007, further reflects of the savvy shopper trend.

Since 2007 our fashion buying habits have shifted slightly to fall in line with the more frugal trends brought about by the Global Financial Crisis. More Australians purchase within the inexpensive, everyday category while Better End and High End fashion purchases have dropped off.

If you wish to know more, pre-order the Directional Insights Christmas-Fashion report.

Aspirations for the local Retail Strip Centre

On average 75% of Australians prefer to shop in shopping centres, however 1 in 4 prefer retail strip centres. They don’t just prefer them, they are passionate about their local high street. With the important fact being that the local retail strip is “ours”, run by locals, serving locals. They have different shapes and sizes, different cultures and appearances, but they are a very important part of many Australian’s shopping routine. So what do Australians want from their local strips?

For the average retail strip shopper, there are four key desires for their local shopping strip. The first is the Independent Retailer, the local boy/girl who runs the store and caters for the local community because they are part of the local community. It feels more intimate and allows the customer to feel like they are supporting their local retailers, as well as letting them feel like they can have a relationship with the retailer rather than just being ‘the another customer’.

Continuing with the idea of personal connection, another key theme is that customers look for Community and Cultural events, providing an even closer link between the customer and the strip. This works to make it more than just a place to shop, but rather a meeting place and somewhere to cater for the needs of the local community.

Shoppers also want Specialist and Premium food retailers in their local strip centre. While not everyone wants a Simon Johnson on their doorstep; there is a universal desire for quality and authentic products whether that is provided by the green grocer, bakery or delicatessen. Shoppers take comfort in knowing a little about the source of their food, even if it is just to know who baked their bread, or shopped the markets for their fruit and vegetables. This theme serves to bridge quality and community, allowing the shopper to buy good products, and to feel involved with their retailer. They know this butcher/baker/grocer, and they know and trust their products.

The final theme is the Time Out experience. Even just visiting the local strip centre can be tiring, and sometimes even though you need to get the next item on the list, you want to just sit down and relax with a coffee or preferred drink. If the strip has a cafe or restaurant away from the traffic in a pleasing environment, you can expect customers to spend some time (and some money) just to get off their feet for a moment and enjoy the day.

Once it was the inner suburbs that were the domain of gourmet retailers and cultural events, now these aspirations are felt by shoppers in middle and outer ring suburbs. Interestingly, the above sentiments echo the key Global trends recently presented by ecochamber’s Howard Saunders. One of the three main ideas Saunders promotes is the ‘Push for Posh’, where people want their stores to feel more special, even if they are not, and this is evident in the desire for premium food retailers.

So, if you stock a strip centre with Independent Retailers, sprinkle it with Community and Cultural Events, add a dash of Specialist and Premium food retailers, and include a place customers can have a Time Out experience, the average Australian will feel inspired to pop down to get the milk and the paper, and whatever else they can get their hands on.

Sales Fatigue

In July of 2010, Directional Insights carried out the AMP Capital Shopping Centres ‘Australia’s Shopping Intent Report’, a regular investigation into the Australian shopper. One of the biggest discoveries was the growth in sales fatigue. According to the Report, nearly half of Australian shoppers find sales to be far less of a draw-card than they once were. There are a few reasons people may find sales to be less enticing.

Firstly, some consumers feel that these sales are not genuine. In the eyes of the Australian shopper, if prices are artificially inflated before the sale, then it is not a genuine sale, it is merely a store with a large number of banners hanging from the ceiling advertising normal prices.

14% of respondents wondered on seeing a sale if they should wait for further price reductions, and 14% stated they feel the sale is an opportunity to go and bargain further, suggesting a portion of Australians feel sales prices are not genuinely as low as they could be.

Top 4 reactions to Sales

Secondly, some shoppers expressed the view that the sales are too regular; an odd view at first glance, but one that makes sense on further inspection. When sales were a grand event, occurring twice a year and drastically cutting prices, they were something to mark on the calendar, an experience to behold and a day to look forward to. However as sales become more and more regular, it ceases to be an event worth taking note of. If every month has a sale, there is no impetus to travel out of your way to the store. After all, even if you miss out on the 3D Plasma TV at 50% off that your husband has been salivating over, there’s always next month. As 45% of respondents stated that they do not take much notice of sales because they seem to be continuous, this seems to be a primary concern.

That is not to say sales are a lost cause. Nearly a third of respondents indicated that “I only shop in sales these days; I don’t feel I should pay full price”. The regularity of the sales means that individuals are able to structure their shopping around them, drawing them in to the store. Furthermore, over a quarter of respondents stated they loved the feeling they were getting a bargain.

So, do sales work on Australians? Some Australians, sure, but the portion of people with sales fatigue is not something that can be ignored. To horribly mangle the famous quote: You can sell to some of the people all of the time, and all of the people some of the time, but you can’t sell to all of the people all of the time.

With all this covered, we need to ask the next question: If Australians are suffering from Sales Fatigue, what can replace the humble sale? What else can lure people into shopping centres and stores?

For more information, please contact Directional Insights for a copy of the AMP Capital Shopping Centres Australia’s Shopping Intent Report July 2010.

Facebook Places

Everybody is aware of the impact and growing popularity of Facebook in modern society. We can keep in touch with friends from far away or very near at the click of a button, relive good times and even play social games on it. Within a few years we will probably be able to pay our taxes over Facebook. Although it has not quite reached that level of sophistication, there is now a new application at play: Facebook Places.

Launching in Australia at the beginning of October, Facebook Places is designed for Facebook Mobile, where users can access their Facebook account via an iPhone or similar device. By allowing the application onto their account, users can update their Facebook account with their current location. You can add locations/’places’ (eg. House, Shopping Centre, or similar) on a global map, and when you are at that location you can ‘check in’, so other users can see where you are. When using Facebook Places, you can even search for ‘places’ of interest which exist near you.

This is all interesting, but what does it mean for businesses? Firstly, it means you need to make sure your business is an established place. Shopping centres are ideal locations to add as a ‘place’ within the application, making it easier for people to know when their friends are using the centre. Using this application, the purpose of shopping centres as social hubs can be given a digital flavour.

The location of your business or centre can be shared with Facebook Places by you or any Facebook user. From there the location can be updated to a business and claimed (through a verifying procedure) or potentially linked with a business page on Facebook.

So, you may have a place of business, but is it on Facebook as a Place of Business?

The Buzz

Pop Up Shopping Centres

Pop Up Retail is a concept we are familiar with, but how familiar are we with Pop Up Centres? Ok, it does not have a full offer, but Magnolia Square is a limited chance to enjoy what could best be described as a Pop Up Marketplace. Functioning almost like a travelling show, it attracts unique retailers to display produce and products that shoppers are unlikely to find elsewhere.

But perhaps the most alluring drawcard of the event is that it is an EVENT; an Event for the shopper. You visit your local centre any time you like, and often do at least once a week, but this a Pop Up Shopping Centre, is a rare event full of wonders unknown instead of the familiar shops you know. Who knows what products you will see and fall in love with? Retailing adventures await!

Magnolia Square will be in Sydney from the 12th to the 14th of November at Randwick Racecourse, Adelaide from the 25th to the 27th of November at Norwood Concert Hall, and will be in Melbourne from the 2nd to the 5th of December at St Kilda Town Hall.

This is also a perfect venue for Casual Mall Leasing Managers to scout out potential new clients that can bring some unknown wonder to a local centre for a short time only, or perhaps become a rare unique retailer in your local centre permanently!

At Directional Insights we are always ‘Keeping you in touch’.

What holds Customers back from shopping?

Everyone would agree Retail Sales have not seen the same growth as a couple of years ago. Is there something holding Australians back from spending? That is just the question asked in the recent July AMP Capital Shopping Centres Australia’s Shopping Intent Report conducted by Directional Insights. People were asked which of the following factors were holding them back from spending more.

I’m trying to reduce my debt.
I’m trying to save for a big ticket item like a holiday, car, home, etc.
I’m worried about rising interest rates.
I’m worried about the world economy and if recovery is actually taking place.
I’m concerned about job security for me/my partner.
I’m concerned about rising utility prices like electricity/water etc.
I’m trying to lead a more sustainable lifestyle and buy less stuff.
I don’t want to spend too much when others are spending less.
I’m waiting for the federal election to be over.
Nothing holds me back from shopping.

The major areas of concern from this list include concern over rising utility prices, reducing debt and living a more sustainable lifestyle, with these factors being selected by 48%, 41% and 37% of Australians respectively.

Top six causes holding Australians back from spending

Age also influenced which aspects were holding Australians back from spending. For example, among 18-24 year olds, the percentage reducing spend to save up for a big ticket item was 55%, much higher than the average of 29%, but conversely only 8% expressed concern about rising interest rates. As a basis for comparison, among respondents aged 65 and over, an enormous 65% were concerned about rising utility prices, twice the average for the rest of the population.

It is no surprise that 41% of Australians say debt is a factor influencing their spending. According to the recent Veda Advantage survey conducted by Galaxy Research, 17% of Australians are struggling to repay their debts and have been forced to sell assets, rely on friends, or severely cut back on spending in order to repay their debts. The age groups with highest concern about lowering their debt are the 25-34 year olds at 53% of respondents and the 35-44 year olds at 51% of respondents.

The impact of other factors may lessen over time. Concerns about the recovery of the world economy and job security are both linked to the GFC. Unless the dreaded double dip occurs and causes further damage, the economy should continue at its pace of steady, relative improvement.

Another important message to take from this data is that the single largest factor holding people back from spending is concern over utility prices, something neither consumers nor retailers have any real control over. With 48% of Australians concerned about this factor, and a fairly even split between the genders (46% for Males, 50% for Females), the prospect of the single largest factor holding people back from spending being something that cannot be easily remedied is a cause for concern.

Finally, perhaps the most important figure to remember is this: 11% of respondents indicated that nothing held them back from shopping. This supports findings from the 2008 Consuming Passions report that around 1 in 10 Australians are shopaholics and nothing holds them back from shopping (no matter what!)

For more information, please contact Directional Insights for a copy of the AMP Capital Shopping Centres Australia’s Shopping Intent Report July 2010.

With thanks to Galaxy Research for use of data from the Veda Advantage Survey.

AMP Capital Shopping Centres Australian Shopping Intent Report

In July of this year, Directional Insights carried out our bi-annual AMP Capital Shopping Centres Shopping Intent Report, a peak into the thoughts of Australian shoppers. The bulk of the July 2010 AMPCSC Australia’s Shopping Intent Report revolved around the discussion of a single question. “What areas of spend will you be spending less on, spending the same as usual on, and spending more on in the coming year?” Comparing this years results to those of the same question posed this time last year gave, an overall impression of the spending habits of Australians. On the whole the results can be summarised in one manner: Promising. Most areas of spend are seeing either a decrease or stabilising rate of people spending less, and an increasing or stabilising rate of people spending more.

Food is always an important area of spend, which can be divided into three areas: Buying take away food, eating out in cafes and restaurants, and take home food and groceries. There have been strong shifts in all of these areas since July 2009.

Take home food and groceries is an incredibly important area of spend, and one that is undergoing a slight shift. While the percentage of people spending more remains relatively steady (26% in July 2009 compared to 28% in 2010), the number of people spending the same has decreased from 57% to 50%, and that change has migrated into people spending less, jumping from 16% to 21%. So with some small easing of the Masterchef effect did eating out improve? Yes!

Buying take away food has improved since July 2009. Previous results showed the number of people spending less stood at 46%, which has now dropped to 42%, with that shift moving into spending the same as usual (41% in 2009 changing to 43% in 2010) and, more importantly, into spending more which jumped from 7% to 10% in this time period. While overall there are still a lot of people spending less in the air, this shift is a positive one.

Finally, eating out in cafes and restaurants has a similar pattern to buying take away food. The number of people spending less in this category was essentially the same as buying take away food, going from 46% of people in July 2009 to 42% of people in July 2010. This change did not affect the numbers of people spending the same as usual, which remained steady. The big change was in the number of people spending more, which doubled from 6% in July 2009 to 12% in July 2010.

An area of surprising improvement is Household goods, like TVs, small electrical items, etc. Within that category, the percentage of people spending less has dropped from 41% to 38%, while the percentage of people spending the same as usual has gone from 44% to 48%, and the percentage spending more has improved from 7% to 10%. There is a similar pattern within big ticket item spending.

Finally, another result that should not be ignored is people not spending at all on the category. On a whole these results either remained steady or slightly dropped for nearly every category, some with quite significant changes. For example, the number of respondents not spending at all on Overseas Holidays decreased from 36% to 30%, and Local Australian Holidays was the same, decreasing from 15% to 10%. This indicates people are spending on more products now than at the same time last year. The lone exception was in Lottery tickets and Lotto, increasing from 20% of respondents not spending on this category at all to 24%.

Overall, the results from July 2010 had a more positive slant than the results from July 2009. With the Global Financial Crisis (hopefully) in the past, Australians are slowly beginning to rebuild confidence, and with that, some of them are beginning to feed their spending habits once more.

NOTE:This is general information only and does not constitute advice nor take into account any individual’s or company’s specific requirements, and should not be relied upon as such. Readers are advised to seek specific advice. Directional Insights makes no representation nor gives any warranty as to the accuracy of future forecasts. This information is not intended as investment advice or other advice and must not be relied upon as such. You should make your own inquiries and take independent advice tailored to your specific circumstances prior to making any investment or other decision. To the fullest extent permitted by law, any conditions, warranties or liabilities implied by law into these conditions are hereby excluded. All copyright resides with Directional Insights Pty Ltd.