AFR RETAIL SUMMIT · debit card spending trending above credit card u.s. percent, year on year 1...
Transcript of AFR RETAIL SUMMIT · debit card spending trending above credit card u.s. percent, year on year 1...
AFR RETAIL SUMMITAFR RETAIL SUMMITAFR RETAIL SUMMIT
PARALLELS
GFC TO NOW
MILLENNIALS AND GEN Z
BROADER BEHAVIOURAL SHIFTS
LONG TERM STEP CHANGE FOR RETAIL SPEND
RETAIL AND RETAIL ANDCUSTOMER INSIGHTS
SUPPORTING MERCHANTS
Afterpay Day sale: biggest on record with 12,000 retailers participating and over $40 million worth of purchases made.
Support Small and Afterpay Connect campaigns showcased hundreds of small businesses.
Over 14 million referrals to retailers globally per month.
PRE-COVID POST-COVID REFERRAL SHIFT
AUSTRALIAN REFERRALS
PERCENTAGE
SOURCE: COMPANY DATA NOTES: PRE-COVID 1/18/2020-3/19/2020 VS. POST-COVID 3/20/2020-5/20/2020, 61 DAYS VS. 61 DAYS
WOMENS FASHIONHOME AND ENTERTAINMENTMENS FASHION
ENTERTAIN THE KIDSSTYLE YOUR SPACEWORK ‘IN’SUPPORT SMALL
PRE-COVID19 POST-COVID19
TRENDS IN RECENT MONTHS
8 MARCH 22 MARCH 5 APRIL 19 APRIL 3 MAY
BABY BOOMER
GEN X
GEN Z
GEN Y MILLENNIAL
GETTING HOME AND FAMILY READYPeaked: Home, Gaming + Hobbies, Fitness, Pet Spend, Groceries
Bottomed out: Jewellery, Footwear
KEEPING EVERYONE COMFORTABLE AND ENTERTAINEDPeaked: Beauty/Cosmetics, Home, Furniture, Office, Toys
Bottomed out: Hair + Beauty Salons, Health, Travel, Groceries, Experiences
NEW CLOTHES, OUTDOOR GOODSPeaked: Apparel, Footwear, Outdoor, Jewellery, Automotive
Bottomed out: Games + Hobbies, Beauty, Fitness, Office, Toys
SOURCE: COMPANY DATA
TRENDS BY GENERATION
GEN Z
Made their homes look good
Spent on beauty + cosmetics
Slowed spending on apparel
MILLENNIALSFocused on home
Kept kids entertained
Spent on beauty + cosmetics
GEN XSpent on home
Spent on entertainment (toys, games, electronics)
BABY BOOMERHome was a focus
Spent on entertainment
Slowed spend on apparel
HOME
FURNITURE
BEAUTY+COSMETICS
PHARMACEUTICALS
AUTOMOTIVE
FURNITURE
HOME
TOYS
BEAUTY+COSMETICS
TOYS
ELECTRONICS
GAMESPET
APPAREL
entertainment (toys, games, VITAMINS+SUP
HEALTH
HAIR+BEAUTY
OUTDOOR
FURNITURE
HOME
ELECTRONICS
GAMES AND HOBBIES
OUTDOOR
FURNITURE
HOME
PET
BOOKS
VITAMINS
HAIR+BEAUTY
HEALTH
PET
BOOKS
VITAMINS
HAIR+BEAUTY
HEALTH
JEWELLERY
AUTOMOTIVE
APPAREL
HAIR+BEAUTY
HEALTH
STRONG GROWTH DECLINE/SLOW GROWTH STRONG GROWTH DECLINE/SLOW GROWTH
SOURCE: COMPANY DATA
THE RISE OF OMNI-CHANNEL
SALES GROWTH
BY CHANNEL
ONLINEONLINEIN-STORE
Online has driven into offline
In-store and online not independent - omni-channel retail has been embraced
In-store as important as ever but people expect integrated offerings
SOURCE: COMPANY DATA
BRAND AND VALUES IMPORTANTConscious consumption or purposeful retail is on the rise
Customers are inclined to shop smaller, and shop localReferrals for SMBs grew 77%
SMB lead volume up 25% in March and April
Recent in-store SMB sales are up over 95%
SMB SALES GROWTH
SOURCE: COMPANY DATA
HOW PEOPLE HOW PEOPLEARE SPENDINGHOW PEOPLE
SYSTEMIC SHIFTS
Across all generations we are seeing the compounding effect of:
offline online
cash debit
credit BNPL
offline onlineoffline online
debit debit
BNPL
ONLINE ADOPTION
IS ACCELERATING
6.6%
FEB
RU
AR
Y
7.1%
11.1%
MA
RC
H
AP
RIL
AUSTRALIAN ONLINE RETAIL GROWTH
APP DOWNLOADS
SOURCE: ABS
of our customers are actively using
our mobile app
80%80%Close to
SOURCE: COMPANY DATA
GLOBAL SHIFT TO ONLINE
US ECONOMIC PENETRATION
PERCENTAGE OF RETAIL SALES
2009 APR 2020
10 YEARS
2019
US ECONOMIC PENETRATION
PERCENTAGE OF RETAIL SALES30%
0%
SOURCE: BANK OF AMERICA, US DEPARTMENT OF COMMERCE, SHAWSPRING RESEARCH
5.6%
16.0% 8 W
EEKS
27%
SHIFT AWAY FROM TRADITIONAL FORMS OF PAYMENT
CRISIS IS CHANGING THE WAY WE PAY
BUY NOW PAY LATER IS IN, CASH IS OUT
9 FEB-80%
19 APR
CASH
BNPL
CHANGE IN TOTAL SPENDING
-32
-7
22%
CASH CARD
BNPL0%
BY PAYMENT TYPE
SOURCE: ALPHABETA AND ILLION, BASED ON A SAMPLE OF TRANSACTIONS ~250k AUSTRALIAN CONSUMERS, RBA
CRISIS
CARD
Cash withdrawals in April fell 30%
New consumer segments adopting BNPL: older and higher income brackets; men
SHIFT AWAY FROM CREDIT CARDS
DEBIT CARD SPENDING TRENDING ABOVE CREDIT CARD
U.S.PERCENT, YEAR ON YEAR
1 FEB 16 MAY
DEBIT CARD
CREDIT CARD
-60%
0%
SOURCE: BANK OF AMERICA GLOBAL RESEARCH
NUMBER OF PURCHASESAUSTRALIA
200620060
PURCHASESPURCHASESAUSTRALIA
1000M
2019 2006 2019
$80B
VALUE OF PURCHASES
SOURCE: RBA. TREND IS SEASONALLY ADJUSTED AND CHANGES IN REPORTING METHODOLOGY MARCH 2008 AND MAY 2018
TOTAL
TOTAL
DEBITCREDIT
CREDIT
DEBIT
WHY THESE SHIFTS WHY THESE SHIFTSWILL CONTINUEWHY THESE SHIFTS
POST-GFC DECLINE IN TRADITIONAL PAYMENT METHODS
20070%
SOURCE: RBA/MWE CONSULTING
60%
2019
SHARE OF VALUEDEBIT
TOTAL CARD
CREDIT/CHARGE
CASH
DECLINE IN CREDIT BALANCES
2007
60k
TODAY
CREDIT AND CHARGE CARDS
SEASONALLY ADJUSTED
20k
SOURCE: RBA DATA
TOTAL CREDIT CARD BALANCES
CREDIT CARD BALANCES ACCRUING INTEREST
YOUNG PEOPLE ARE TURNING AWAY FROM CREDIT CARDS AND CASH
2002
CREDIT CARD OWNERSHIP AMONG YOUNG AUSTRALIANS
2019
YOU
NG
PE
OP
LE W
ITH
CR
ED
IT C
AR
DS
In 2019, 36% of people aged 20-35 owned credit cards
59%
In 2019, people aged 20-35 owned credit cards
36%
14%
64%
In 2019, only ~14% of payments made by 18-29 year-olds were in cash
SOURCE: HILDA + RBA DATA
CASH
CREDIT
TOMORROW’S TOMORROW’SCUSTOMERTOMORROW’S
GEN Z: While Millennials turned away from credit cards, Gen Z aren't even signing up: 94% of Gen Z use debit on our platform.
Want low-commitment, straight-forward solutions for what they need.
Want to stay in control financially, especially post COVID.
Expect digital integration - shopping via social media is second nature.
Expect retailers to embrace a circular economy and care about sustainability and supporting small.
SOURCE: THE FUTURE LAB
ONE IN EVERY THREE DOLLARS SPENT ARE MILLENNIALS AND GEN Z REPRESENTING ALMOST HALF THE WORKFORCE 1
GENERATION SHARE OF
LABOUR FORCE
GENERATION SHARE OF TOTAL
SPENDING
MILLENNIALSGEN ZGEN XOLDER GENERATION
MILLENNIALS AND GEN Z ACCOUNT FOR 37% TOTAL RETAIL SPEND THEY CONTRIBUTE A GREATER PERCENTAGE OF THEIR INCOME TO RETAIL SPENDING 2
37%
GENERATION SHARE OF RETAIL
SPENDING
38%
12%15%
35%
MILLENNIALS + GEN ZGEN XOLDER GENERATION
31%
38%
35%
SOURCE: 1. ABS LABOUR FORCE SURVEY, MAY 2020; ABS CENSUS 2016 2. HILDA WAVE 18 NOTE: DEFINITION OF GENERATIONS IN THIS REPORT: GEN Z INCLUDES INDIVIDUALS BORN AFTER 1996. MILLENNIALS INCLUDES INDIVIDUALS BORN BETWEEN 1981 - 1996, GEN X ARE INDIVIDUALS BORN BETWEEN 1965 - 1980, OLDER GENERATION ARE INDIVIDUALS BORN BEFORE 1965. RETAIL SPEND INCLUDES CLOTHING AND FOOTWEAR; HOME REPAIRS, RENOVATION AND MAINTENANCE; MEDICINES, PRESCRIPTIONS AND PHARMACEUTICALS
35%
28%
MILLENNIALS + GEN ZGEN XOLDER GENERATION
INCREASED AT A MUCH FASTER RATE THAN OLDER HOUSEHOLDSAVERAGE ANNUAL HOUSEHOLD EXPENDITURE ON RETAIL
1,294
3,891
5,337
6,377+19%
2006 2018 2006 2018
BY GENERATION GROUP$, 2006-2018
MILLENNIAL AND GEN Z TOTAL RETAIL SPEND BY 2030
IF THESE TRENDS CONTINUE,
2006 2030
GEN Z
RETAIL MARKET SIZE FOR MILLENNIALS AND GEN Z
MILLENNIAL
2020
MILLENNIAL
SOURCE: HILDA WAVES 6-18 NOTE: RETAIL SPEND INCLUDES CLOTHING AND FOOTWEAR; HOME REPAIRS, RENOVATION AND MAINTENANCE; MEDICINES, PRESCRIPTIONS AND PHARMACEUTICALS
AS GEN X AND MILLENNIALS HAVE AGED, RETAIL EXPENDITURE FOR YOUNGER HOUSEHOLDS HAS
+201%GEN Z / YOUNGER MILLENNIALS
GEN X / OLDER MILLENNIALS
THANK YOU