Author: James Turnbull, National Manager - Retail Do trends in consumer expenditure/consumption data support a case for more non-retail floorspace at shopping centres?
The ABS released its latest edition (2015/16) of the HES in September 2017, after a six year wait since the 2009/10 survey.
The survey provides the most comprehensive publicly available information as to household expenditure patterns/behaviours across Australia, at a given point in time.
Macroplan has analysed the trends in households’ expenditure over time from the various HES surveys dating back to 1984. The chart below shows that the proportion of the household budget being allocated to ‘retail’ goods and services has been steadily decreasing over time, from 40% in 1984 to around 30% in 2016, with an increasing share attributed to ‘non-retail’ categories. However, it appears that this shift has continued over the latest period albeit at a slower rate (i.e. a flattening).
The key drivers of this shift have been twofold:
- Much higher relative inflation in non-retail categories over the past 20 – 30 years (and past 5 years) compared with retail categories. In particular inflation in education, health and housing have far exceeded inflation in food & beverages, clothing/footwear and households goods/services, etc.
- A shift in consumer preferences towards more ‘experience’ based expenditure, and less purchasing of material items. This explains the strong growth in food expenditure as an example.
Another way to look at the HES data is by age cohort. The chart below shows that, not unexpectedly, as people/households move through their life-cycle their household incomes tend to increase (higher wages, dual wages), and their typical household expenditure increases. This is particularly relevant in the 35 – 54 year age group where many households/families have kids at home.
Average household expenditure tends to decline once households reach 55-64 years of age, and much more significantly once above 65 years. Interestingly, as the chart shows, the total amount spent on housing costs and transport declines greatly in these age groups, as people work less, drive kids less, and pay off mortgages.
One thing that holds true across all age cohorts though, and that is that the majority of household expenditure is not spent on ‘retail’ goods and services. Shopping centres already have around 15-20% of occupied GLA allocated to non-retail uses, but the new HES data shows that perhaps there is more opportunity to increase/recalibrate the floorspace mix in shopping centres to meet household consumption behaviours.
Should you wish to discuss the results of the new ABS HES data or ABS Census data, and its implications for your projects/assets, please contact James Turnbull, National Manager - Retail.