|Victoria has re-joined all other Australian States by ending its COVID-19 lockdown.|
The Reserve Bank thinks that Australia is now technically out of recession (1).
But the underlying psychology is less positive.
This less positive mindset is demonstrated by these findings:
1. The Australian Bureau of Statistics (ABS) reported that in 2019, more Australians had cash flow problems than five years before – 22% – compared with 19% in 2014 (2).
2. The ABS October 2020 Household impact of COVID-19 survey found that 16% of Australian households felt their financial circumstances had worsened because of COVID-19. Certainly, 72% noted no change and 12% felt an improvement in their financial circumstances, but 21% of households with children reported their financial circumstances had worsened (3).
3. The recovery period, for a COVID-19 infected-person, if they recover, can range from two weeks for a mild case to perhaps six or more weeks for severe cases (4). The recovery time required for those potentially unable to work poses a problem.
4. Again, as the ABS notes, 18% of people with a job did not have enough paid sick leave to take two weeks leave, and 33% had no access to paid sick leave (3), so paid COVID-19 sick leave for recovery is out of reach for many.
This background makes Melbourne University Professor de New’s just released Australians’ Financial Wellbeing Study finding that there is an increase in precautionary savings, unsurprising (5).
The increase in precautionary savings can be reflected in a renewed mindset and practice that sees:
* Reductions in smaller value spending. Perhaps fewer purchased coffees or accompanying indulgence foods, or other retail purchases, or the
* Deferral of larger purchases, such as homes, renovations or cars, which usually require borrowings to finance them.
The business issue is how to respect customers and prospective customers’ precautionary mindsets while encouraging them to shop more with you or to advance their larger, financed purchases.
Our role is to help you by telling you your customer-action motivating insights.
If clarifying those in this changed mindset times can help you to strengthen your business, please call or email Philip Derham today.