Australian Consumer Willingness and Ability to Spend Robust Post-Bali Bombing

Retailers can Expect a Merry Christmas and a Happy New Year

Charlie Nelson

director foreseechange

11 November 2002

Consumer willingness and ability to spend, as measured in late October, indicate that the retail boom is set to continue into 2003.

Willingness to spend is based on how consumers would allocate a discretionary $1,000 between spending, saving, and loan repayment (Chart 1).  In October, the average allocation to spending was $332, down slightly on the all-time high measurement six months ago ($358.60) but still at the boom-time levels recorded in 1999.

Chart 1

Ability to spend is at an all-time high.  Over 60% of consumers report that they have discretionary income - money left over after meeting commitments.  This is the equal highest level recorded – equal to the December 2000 reading.

Combining the willingness and ability to spend yields four spending disposition segments (Chart 2).

Chart 2

• Profligate Spenders are both willing and able to spend;
• Reluctant Spenders are able to spend, but prefer to save or repay debt;
• Frustrated Spenders are willing to spend, but have no spare cash;
• Frugal Spenders are both unwilling and unable to spend.

The important Profligate Spender segment is currently 22.5% of adults – down slightly on six months ago, but well up on 12 months ago.  The current size of this segment is consistent with retail spending growth over the next few months in excess of 7% above the same time a year earlier

Plans to travel overseas have not been significantly dented by recent events.  Intentions to put discretionary funds towards overseas travel have not changed in the past six months and are well up on 12 months ago.

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