Consumers expect reduced prices in Australia

04 August 2010

SYDNEY: The widespread use of promotions in the last year has "trained" shoppers in Australia to expect reduced prices, posing substantial challenges for retailers in the economic recovery.

According to the Discount Retailing Study from TNS, the research firm, some 65% of adults in the country believe they will always be able to pick up goods on special offer.

This threatens margin levels in the future, alongside exerting a more immediate impact, as just 23% of participants to the organisation's survey had waited until the mid-year sales to buy products.

This traditionally vital period in the trading calendar was thus essentially “nullified”, as confirmed by the Commonwealth Bank's Business Sales Indicator, which stated that spending in stores fell 1.7% in June.

Chris Kirby, the director of retail and shopper research at TNS, argued many customers will now “only accept” items available at a low cost.

“Consumers are no longer willing to accept the first price they find; they know there's a good chance of finding it cheaper somewhere else,” he said.

Elsewhere, the report found that 97% of Australians with web access look to learn about potential purchases online as part of the decision-making process.

As the internet penetration rate in Australia stands at 85%, TNS suggested this shift had led to the advent of a new generation of “prosumers.”

“In essence the industry is training us to become professional, if not predatory, consumers,” said Kirby.

“This more proactive group of consumers display a high willingness to search for information, engage with brands, bargain for the best deal and access and contribute to word of mouth and user reviews.”

Such a development applies across most categories, even for consumer goods like cosmetics, with price comparison sites and e-commerce portals among the tools that have proved popular.

Web discounters like CatchoftheDay have also enhanced their position in the technology and household sectors, as the convenience and cost benefits of the net attracts greater numbers of customers.

Data sourced from TNS; additional content by Warc staff