Shoppers spend in store but eat and drink at home as retail resets

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While overall Australians remain optimistic about their spending capacity in the next year, middle income earners have started to become more cautious, giving retailers such as Wesfarmers an advantage as shoppers “trade down” to more budget purchases, analysts said.

UBS retail analyst Shaun Cousins said consumers were also being more discerning about eating and drinking outside the home.

“The consumer is managing the higher cost of living with deliberate category decisions of where to spend. In alcohol, as well as food, we expect a shift to more at home, and less out of home, consumption, given the lower cost of at home consumption,” Cousins said.

“For Endeavour Group, this is a negative for its hotels division yet a positive for its retail division, reflecting its diversified position within the alcohol industry.”

Monthly household expenditure data from the Australian Bureau of Statistics released on Wednesday showed that through-year spending increased in all categories except for alcohol and tobacco sales, which declined by 12 per cent in February.

Overall household spending rose 11.8 per cent, driven by growth in non-discretionary purchases as households spent more on food and transport.

Major supermarkets Coles and Woolworths have previously flagged they expect more consumers will dine at home instead of at cafes and restaurants as more budget-focused shoppers feel the pinch.

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A cost of living survey of more than 9000 Coles customers for March, released on Wednesday, showed that 66 per cent of shoppers reported cutting back on dining out and eating fast food.

The supermarket giant said young singles and couples were among those now starting to curb everyday expenses, with 86 per cent of shoppers saying they were now changing how they shopped to reduce their grocery bills.

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