afr retail summit · debit card spending trending above credit card u.s. percent, year on year 1...
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AFR RETAIL SUMMITAFR RETAIL SUMMITAFR RETAIL SUMMIT
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PARALLELS
GFC TO NOW
MILLENNIALS AND GEN Z
BROADER BEHAVIOURAL SHIFTS
LONG TERM STEP CHANGE FOR RETAIL SPEND
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RETAIL AND RETAIL ANDCUSTOMER INSIGHTS
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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.
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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
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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
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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
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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
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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
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HOW PEOPLE HOW PEOPLEARE SPENDINGHOW PEOPLE
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SYSTEMIC SHIFTS
Across all generations we are seeing the compounding effect of:
offline online
cash debit
credit BNPL
offline onlineoffline online
debit debit
BNPL
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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
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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%
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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
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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
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WHY THESE SHIFTS WHY THESE SHIFTSWILL CONTINUEWHY THESE SHIFTS
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POST-GFC DECLINE IN TRADITIONAL PAYMENT METHODS
20070%
SOURCE: RBA/MWE CONSULTING
60%
2019
SHARE OF VALUEDEBIT
TOTAL CARD
CREDIT/CHARGE
CASH
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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
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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
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TOMORROW’S TOMORROW’SCUSTOMERTOMORROW’S
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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
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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
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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
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THANK YOU