Lyndall Spooner predicts that the retail recession currently experienced in Australia will bring about life-changing developments for consumers in the next 12 to 24 months. Recent statistics reveal a 0.6 per cent decline in retail turnover during the March 2023 quarter, following a 0.3 per cent decrease in the previous quarter, indicating a recession in the retail sector.
Spooner, the founder and CEO of Fifth Dimension, an Australian strategic research and consulting agency, believes that this challenging period will pave the way for new brands and products that are better equipped to meet the needs of financially constrained consumers seeking entertainment and new experiences. Fifth Dimension’s trust model, which emphasizes a brand’s capability to deliver on promises and operate ethically, highlights the importance of establishing and maintaining trust with customers.
Spooner draws attention to previous instances where innovation thrived during difficult financial periods. Iconic brands like Burger King, Mailchimp, Uber, Airbnb, and Groupon all emerged during economic recessions, empowering consumers to take control of their assets and adopt a thrifty approach to spending. Spooner predicts a similar trend in the next couple of years, with new products and brands giving consumers more power to save money while pursuing their lifestyle ambitions.
The next 24 months are expected to witness key developments in the market space. Firstly, there will be a shift toward cheaper pricing as brands face downward pressure to reduce costs and entice sales. This will drive innovation and waste elimination. Secondly, unwanted features bundled with products will be phased out as brands reevaluate packaging and delivery methods to cater to consumer preferences. Simplifying offerings will benefit consumers.
Spooner foresees the emergence of “no frills” brands that provide affordable solutions to lifestyle needs. These brands will prioritize affordability and organically grow through competitive pricing and social media promotion. Additionally, green features and sustainability will no longer command a premium price. Consumers’ desire to make environmentally friendly choices will drive brands to offer affordable, eco-friendly options. Greenization will replace premiumization.
Automation and self-serve solutions will dominate the service sector, with businesses introducing self-serve selling and AI-powered support systems. Human-delivered services will become increasingly rare, as AI and automation take over front-line service roles. However, Spooner predicts that the cost of in-person service and delivery will rise due to increasing wages and complex employment laws. Consumers will need to pay more for such services, leading to a divide between those who can afford them and those who can’t.
