Across the country, wallets keep shutting. However, Australians haven’t completely stopped discretionary spending.
Over the last six weeks, retailers lifted financial performances predicting a more positive outlook on spending. The numbers calculated suggest even though consumers have cut back on shopping sprees, some product categories remain unchanged.
The categories below represent the five product areas where consumers are continuing to spend.
Car Accessories
Super Retail Group (ASX-listed), released a stronger than expected result for 2023, with Super Cheap Auto continuously climbing.
Sales for the company rose 8% for 2023, to $1.45 billion, and momentum remained strong in the first weeks of the new financial year. This continued regardless of the weakening consumer confidence.
Anthony Heraghty, Super Retail Chief Executive, claimed the numbers indicated car parts/accessories performed strongly, independent from the economic environment.
“When times are good and everyone buys a new car, they buy car wash and car care. When times are tough, car maintenance fires, and that’s exactly what we’ve seen.”
Coffee Machines
Given caution surrounding big-ticket item spending, home-appliance makers have struggled to keep selling their products at the moment.
However, coffee-machine manufacturer Breville says sales are still strong, indicating a daily caffeine fix is still in most budgets.
Breville revenue rose 5% in the Asia-Pacific region this past financial year to $292.2 million, with the company acknowledging the demand for products such as juicers and processors had weakened. It revealed the latest range of coffee machines had landed well with consumers.
Martin Nicholas, Chief Financial Officer for Breville said “After a quiet [two years] with minimal product launches, these new products added to growth in the global segment.”
Phones and ‘Essential’ Consumer Tech
For 2023, JB Hi-Fi profits dropped however, while boss Terry Smart was cautious with spending, he claimed certain “essential” electronics sales remained unchanged.
“We’re seeing categories like mobile phones continue to be strong.”
Consumers had also been shopping for new phone plans, which resulted in companies like Kogan, leading to a 3.1% rise in revenue from Kogan Mobile for 2023. It also saw a 71.5% rise in turnover in New Zealand.
Kmart Fashion
Although Kmart has reached cult status for its homewares, consumers were headed straight for the clothing.
Wesfarmers, which owns Kmart and Target, revealed its apparel offers were performing strongly during the current economic conditions.
Ian Bailey, Kmart Group’s Managing Director said, “We’re working really hard on apparel in both Kmart and Target, and we’re seeing some good results because we feel like we’re delivering better value than the majority of players in the market.”
The company has also benefited from shoppers trading down from specialty retailers while on the hunt for value. Kmart reported sales growth across every product category this year.
Top-Shelf Only Alcohol
No matter the climate of the economy, alcohol remained a resilient category, however recent results are suggesting consumers are opting for top-end brands over value.
Sales for affordable labels belonging to Treasury Wine Estates declined this past year, whereas luxury wine demand remained strong, with 14.2% for the year to $364.7 million.
Tom King, Penfolds Brand’s Managing Director said, “We’ve continued to see robust demand for luxury wine and the Penfolds brand globally.”
Chief Executive Steve Donohue from Endeavour Group, operator of Dan Murphy’s said, “Encouragingly through the year, we’ve seen continued very strong growth in the sales of luxury and premium wines that make up our Paragon Wine Estates portfolio.”
Based upon these projections, it appears these sectors will continue to grow, despite the economic conditions.
