Sep 8, 2010

How to get frugal consumers spending againBy Nina HendySmartCompany.com.au

For much of the past decade, many Australian businesses have relied on a simple idea to fuel growth – consumers love buying new stuff. But right around the world, there are signs that this is changing as customers adopt a more frugal, conservative attitude.

In the US, there is a growing group of consumers who are no longer turned on by buying new things. While this is partly driven by cost-cutting, many others would simply prefer to spend their money investing in experiences that create lasting memories, rather than purchase yet another pair of designer shoes. And this isn’t just a downturn trend – research has demonstrated that experiences make us happier than goods.

This movement doesn’t bode well for Australian businesses, with many already noticing a change in consumer sentiment as families batten down the hatches and cocoon at home.

Craig James, chief economist, CommSec, recently examined unpublished data from the Australian Bureau of Statistics in the March quarter found that consumers cut back their spending on gambling and air travel, which is consistent with the more conservative behaviour recently adopted by consumers.

Read complete article.