Speaking at a media lunch in Sydney yesterday, AGHA CEO David Leek said “cautious consumers” (people who have become anxious about spending on non-essentials since the GFC) were expected to remain a major part of the local economy for at least another two years.
“Everybody who wants to survive in business has to respond to the needs of these new consumers,” he said.
Leek said that retailers who ignored these consumers’ new spending habits would ultimately suffer the consequences as the changed attitudes to shopping were not just “a blip” or “trough” that businesses could simply ride out by doing what they have always done.
“The retail market has fundamentally changed,” he said, “and retailers need to change too.
“The idea of doing business the same way you did business in the 1990s is long gone. The industry is changing, wholesalers are directly selling to the customer while retailers are cutting out wholesalers and are purchasing directly from the manufacturers. Companies are also designing their own products and getting them manufactured in, for example China, and then selling them directly to the end consumer.”
Despite the inherent challenges of meeting such consumers’ rapidly changing demands, Leek stressed that many retailers were currently thriving.
“Some retailers are growing − they are trying different things to attract customers and they are succeeding.”
Leek’s comments were supported by NSW Small Business commissioner Jasmine King who was also a speaker at the media lunch.
“Businesses who don’t like change, better like the alternative − extinction,” she said.
“Retailers need to realise that they have to pay attention to not only how much consumers are spending but what they are spending on.
“Currently consumers are spending on experiences rather than products − perhaps because they already have too much stuff?”