Granular transaction data from more than 1.8 million Australians in April shows move from panic-purchasing in March, to a once-in-a-generation shift in spending behaviours in April.
Sydney – 18 May 2020: From panic-purchases in March to a significant change in spending behaviour in April, the timely release of the Zip Weekly Spending Index for April has revealed a glimpse of the social, economic and cultural shifts we can expect in a post-COVID Australia.
Key insights include:
- There has been a sizable shift in transport modes that may change the way that we move around our While tolls, car insurance, petrol and parking all saw spend plummet, bike and scooter shops were one of the biggest winners in April, seeing significant increases in volume and spend.
- While supermarkets were big winners in March, April has seen a shift to more local shopping behaviours, indicating a cultural alignment to supporting small businesses. Spending in bakeries, fruit and vegetable shops, and on specialty food has all significantly outpaced growth in supermarket spend.
- The move toward a cashless society has accelerated with the use of ATMs continuing to decline steeply, while online marketplaces have almost doubled in share of wallet.
- Following high unemployment growth in April, there has been substantial growth in spend on services typically associated with starting a business like web-design and hosting, IT services, and marketing & More here.
- Sustained growth in spend on goods and services associated with remote working; specifically in office equipment, stationery supplies, and computer
Peter Gray, Co-founder and COO of Zip said:
“Zip’s retail spend data is showing us how consumer spending can be a powerful barometer of broader economic and societal change ahead of us.
“There are extraordinary economic and social factors that are causing consumer behaviour to be incredibly dynamic. We haven’t seen these sorts of swings in spending before, ever. The big question is what does this mean for the medium and long-term? From what we are seeing we would predict this is a sign of things to come, people returning to shopping local and moving away from the cash society we have been so accustomed to. The insights from Zip’s report can help retailers and small businesses understand what the world after COVID looks like, and how they can better position themselves to thrive.”
The Zip Weekly Spending Index is based on anonymised transaction data from a sample of more than 1.5 million Zip customers and 300,000 Pocketbook users. Unlike other retail reports, the index provides a granular look at week-by-week changes in spending across different categories, providing fresh insights into consumer behaviour during the COVID-19 crisis.
The key findings are outlined below. Data must be attributed to ‘Zip Weekly Spending Index’. Note the report has two sections, March vs April and a week-by-week breakdown of April spend.
Zip Weekly Spending Index April 2020
April spending data, gathered from Pocketbook transactions, gives us our first look at Australian life in lockdown – which sectors suffered, which performed well, and what this might mean once restrictions are relaxed.
General spending trends in April
(April 2020 vs April 2019)1
(April 2020 vs April 2019)1
|Online marketplaces||+93%||ATM withdrawals||-56%|
|Hobby stores||+53%||Petrol & Service Stations||-47%|
Last month, Australia’s coffee shops suffered a serious caffeine hit. Allowed only to operate through takeaway and home delivery, spending at cafes in April 2020 was half what it was in April 2019, although still higher than other affected categories.
Like cafes, many hairdressers remained open in April but were forced to adapt with strict social distancing restrictions in place. The financial impact on hairdressers was also similar to cafes, with spending down 52%.
One of the biggest shifts during the COVID-19 lockdown has been the acceleration of the transition to a cashless society. During the weeks of lockdown, ATM usage plummeted and that trend continued in April (down 56%), while spending on online marketplaces almost doubled compared to the same period last year (up 93%).
Faced with restrictions on non-essential travel, but encouraged to get outside and exercise, it appears that many Australians took to the saddle last month. Compared with the same period last year, April 2020 saw a significant drop in car-related expenses, including parking (-66%), petrol and service stations (-47%) and tolls (-55%), while spending at bike stores increased by 76%.
Other interesting trends in general spending:
- Lingerie retailers fell by -39%
- Fruit and vegetables increased by 39%
- Hardware stores increased by 44%
- Home pools and spas increased by 28%
- Nurseries & Gardening Retailers increased by 58%
- Outdoor home improvement increased by 50%
- Security & safety system installation increased by 269%
Buy now, pay later trends in April
|Spending up (monthly, YOY)1||Spending down (monthly, YOY)1|
|Bikes and scooters||+79%||Cosmetics||-66%|
The most sought-after products to purchase through buy now, pay later in April were bicycles and scooters. Typically higher-ticket items, Australian consumers are deciding to use Zip to spend more money on high-end bikes and spread repayments flexibly over time. With a 79% boom in sales in April, the biggest spike was seen during the week of 13th April where bike sales rose 86% compared with last year. We can confidently say we’ll see more bikes and scooters on the road in a post COVID world, and that may lead to bigger shifts in how we move around our cities.
As more Australians spent time at home, sales in cosmetics plummeted (down 66% – which is 60% lower than the previous month). However, it’s not to say that personal grooming and self-care has been abandoned: skincare spend was up 34% this month. Similarly, with salons being hit hard by social distancing, hairdressers saw a significant (42%) drop in spend, yet haircare at home saw a modest boost (24%).
General spending (week by week)
|Weeks||Spending up (weekly, YOY)1||Spending down (weekly, YOY)1|
|Monday 30 March – Sunday 5 April||Security & Safety System Installations||+221%||Public Transport||-69%|
|Office equipment||+82%||Counselling, mental health||-29%|
|Web design||+42%||Car insurance||-27%|
|Bike shops||+35%||Personal care||-15%|
|Monday 6 April – Sunday 12 April||Bakeries||+111%||Public Transport||-72%|
|Hobby Shop||+105%||ATM Withdrawals||-62%|
|Web Design||+69%||Pet Services||-52%|
|Web hosting||+51%||Sporting Goods||-37%|
|Monday 13 April – Sunday 19 April||Bike Shops||+129%||Public Transport||-63%|
|Computer Retailers||+102%||Cosmetics, beauty retailers||-54%|
|Tutoring||+89%||Petrol service station||-39%|
|Monday 20 April – Sunday 26 April||Solar||+145%||Music & Apps Subscription||-71%|
|Counselling, Mental Health||+91%||Takeaways||-22%|
|Bike Shops||+81%||Sporting Goods||-21%|
|Marketing & advertising||+50%||PayTV subscriptions||-16%|
Weekly spending data in April highlighted the changing behaviour in Australian consumers after March’s panic-buying settled.
As the ABS revealed record high unemployment figures in the weeks leading up to 18 April, Australians had been increasing their spending in products and services associated with starting a business and upskilling. Spending was up on web hosting (+51%), web design (+69%), marketing & advertising (+50%) and TAFE (+15%), compared to the same weeks in 2019.
And while Australians continued to work remotely throughout April, retailers saw purchasing behaviour trend toward home office buying. The first week in April saw stationery and office equipment retailers benefit (up 82%), and computer retailers had a strong week commencing April 13th (up 102% year on year).
Being at home more often meant more spending on food and groceries. One major trend in April was a move toward local producers, rather than supermarkets. While supermarket expenditure grew in April, there was more significant growth in specialty food deliveries (up 80%), bakeries (up 111% during the week of April 6th), fruit & vegetable shops (up 51%), and butchers (up 33%).
More time at home also means higher energy bills. Perhaps in preparation for the bill shock to come, Australians have dramatically increased spending on solar (up 145% during the week of April 20th). More broadly, Australians are using this time to double down on other forms of home improvements, with trade and home improvement services like carpentry, home pools & spas and security & safety system installations seeing a big month in April.
The enforced time at home, however, comes with difficulties. As Australians learn to deal with unprecedented changes in their lives, Beyond Blue has noted a 30 per cent increase in calls since the lockdown. As we progressed in April, counselling and mental health related spending, which recorded a 29% dip at the start of April, also saw a 91% spike in spending by the end of April.
Week-on-week spending trends in April
Week-on-week spending trends since the COVID-19 crisis began
1 Selected data
About the report
The Zip Weekly Spending Index is based on anonymised transaction data from a sample of more than 1.5 million Zip customers and 300,000 Pocketbook users
Data from the more than 1.8 million Zip and Pocketbook accounts was analysed to identify trends in consumer spending throughout April. This also included transaction data from financial services accounts linked to the Pocketbook app.
Unlike other retail reports, the Zip Weekly Spending Index provides a granular look at week-by-week changes in spending across different categories, providing fresh insights into consumer behaviour during the COVID-19 crisis.
ASX-listed Zip Co Limited (ASX: Z1P) or (“Zip”) is a leading player in the digital retail finance and payments industry. The Company offers point-of-sale credit and digital payment services to the retail, education, health and travel industries. It operates under the Zip Pay, Zip Money, and Pocketbook brands. The Company is focused on offering transparent, responsible and fairly priced consumer products. Zip’s platform is entirely digital and leverages big data in its proprietary fraud and credit decisioning technology to deliver real-time consumer responses. Zip is managed by a team with over 50 years’ experience in retail finance and payments and is a licensed and regulated credit provider.
For more information, visit: www.zip.co