Australia’s transition to living with the COVID-19 virus is a blessing for many businesses that are now subject to far fewer government restrictions.
However, it does mean that business activity is far more influenced by the confidence and fears of consumers, who are making up their own minds when it comes to how much they want to participate in a ‘living with COVID’ economy.
That places a higher importance on real-time information on consumer sentiment – and to that end, Deloitte’s Global State of the Consumer Tracker, in place since the onset of the pandemic, is perhaps becoming even more valuable.
The latest data from the tracker (covering January 2022) shows that in Australia, and on a number of fronts, the Omicron variant has taken a short-term toll on consumer wellbeing. Before the arrival of Omicron in November, 55% of Australian consumers were optimistic about their financial position, and that it would improve in three years’ time. Since then, this has fallen to 51% in December before improving marginally to 53% in January, with those aged 18-34 and 55 and older feeling less confident about their financial position.
Inflation is one area of broader concern for consumers. In January 2022, 69% of Australian consumers were concerned about inflationary pressures. Inflation perceptions were relatively high for goods such as clothing, alcohol and tobacco, and groceries, and have all increased since November last year.
But overall, price concerns for Australian consumers are lower than in many other economies across the globe, including the US, Germany, Canada, Spain, and the UK, with at least 78% of consumers in these countries being worried about prices of everyday goods going up.
Of most concern to many retailers would be consumers’ perceptions of health and safety. In comparison to pre-Omicron levels, consumer safety perceptions have fallen notably across all settings. At present only 61% of consumers feel safe visiting a retail store, down from 74% in November. Restaurants and in-person events have also been hit by elevated consumer anxiety, with the share of consumers feeling safe falling 11% across both these settings to 56% and 42% respectively.
Source: Deloitte – Global State of the Consumer Tracker
And safety concerns haven’t only been felt in Australia, with consumers across the US, Canada, Japan, and China feeling more concerned about attending different venues and the COVID-related health risks this might present. In these countries, concerns have largely increased for attending stores as well as in-person events, with Chinese consumers 15% more worried about visiting stores compared to November 2021, while those in Japan were 13% more concerned about attending in-person events.
Conversely, consumers in the UK and Germany have become relatively less concerned about attending venues – and for the UK, this may be associated with an earlier passing of the Omicron peak.
Source: Deloitte – Global State of the Consumer Tracker
But in Australia, there are also signs of the tide shifting. Discretionary spending intentions are showing signs of improvement. In November 2021, discretionary spending as a share of total spend was 33.9%, with this shifting up to 34.7% in January. Spending intentions in recreation and entertainment, restaurants, transportation, saving and investing, and leisure travel have all improved, while spending on electronics and home furnishings have dipped since November.
Such improvements in spending intentions have also been seen in other countries, such as Germany and the Netherlands, but in the US, Canada and UK, discretionary spending intentions remain relatively lower than November levels. This may be related to inflation concerns, with prices surging in these three economies. Keeping inflation in check will certainly be important in safeguarding Australia’s consumer-led pandemic recovery in 2022.