The Australian Retailers Association (ARA) said new consumer research from studies with Research Now and Shopworks Science revealed retailers have another tough year of trade ahead as over 50 percent of consumers plan to spend less and over 45 percent plan to save more in 2011.

ARA Executive Director Russell Zimmerman said the survey of over 800 consumers from across Australia showed a clear trend towards saving and paying down debt rather than spending.

“Sobriety really is the new black. Since the GFC and throughout 2010 value-seeking consumers looking for sensible purchases meant tough trading conditions for retailers and this trend is expected to continue in 2011 and beyond.

“2011 will have its own set of challenges as electricity prices soar and flood affected crops bump up the prices of fruit and vegetables. Over 45 percent of consumers said the increased cost of living in 2011 would tighten their budgets.

“New taxes have also spooked consumers with 30 percent saying they will spend less due to the anticipated flood levy. 

“Paying off debt will also continue to be focus for prudent shoppers with a third of consumers planning on paying more than required off their credit card debt and almost 20 percent will pay more than their minimum mortgage repayments.

“The news that retailers can expect another tough year comes after Christmas sales failed to meeting predictions of 3.5 percent year-on-year growth with sales over the six week 2010 Christmas period only two percent higher than the year before.

“The struggle retailers are facing is evident in recent profit downgrades posted by retailers including Myer, Woolworths and The Reject Shop, as well as last week’s news that Red Group Retail’s Borders and Angus & Robertson have been handed to administrators.

“Our advice to retailers is to try not to rely on heavy discounting alone to get consumers spending – shoppers need to see real value in whatever they are buying. Find out what your customers really want, communicate with them, get online, embrace multi-channel strategies,” Zimmerman said. 

For over 100 years, the Australian Retailers Association (ARA) has been the peak industry body in Australia’s $240 billion retail sector which employs over 1.2 million people.  Visit www.retail.org.au or call 1300 368 041 www.retail.org.au