Aussies would rather cut back on grocery spend than give up Netflix, Spotify and takeaway

WE’RE a nation of “millionaires”, and times are tougher than ever — but you wouldn’t know it from how we’re spending our money.

AUSTRALIANS are increasingly choosing to cut back on core essentials like groceries rather than give up their “little luxuries” such as streaming services and restaurant delivery apps.

That’s according to a new household expenditure report by Deloitte Access Economics, commissioned by Aldi, which warns Australian households are more than ever feeling the pinch from rising costs.

The study — based on a survey of more than 1000 households combined with macroeconomic analysis — found that while the average Australian household’s net wealth crossed $1 million for the first time this year, we may just be the world’s “poorest” millionaires.

It found that 37 per cent of Australian households were concerned about their ability to pay for expenses such as bills and household costs, up from 31 per cent in 2015 when Aldi last commissioned the study. That figure is expected to rise to 40 per cent by 2019.

“It’s not news to us that customers are feeling the pinch,” said Aldi Australia chief executive Tom Daunt. “If anything I think the scale of it more than anything else [was surprising], 37 per cent is a big slice of Australian families.

“Average net wealth has exceeded $1 million for the first time, but the reality is that’s stored in assets like the family home. What makes people feel rich is when they’ve got money to spend. Pressure on discretionary income is as hard as it’s been in a long time.”

The three key trends highlighted by the report were shoppers increasingly citing “value” over price as a reason to switch supermarkets, a reduction in brand loyalty, and the preferencing of “little luxuries” over core essentials.

The report dubs them the “new essentials” — while Netflix only launched in 2015, today 39 per cent of Australians subscribe to some sort of entertainment streaming service. Similarly, online spending on takeaway food grew by around 30 per cent in the 12 months to February.

“Whether it's a Netflix subscription or a takeaway meal, I think what’s happening is that as discretionary spending becomes more and more pressed, people are looking for sensible ways to save,” Mr Daunt said.

“They may be not upgrading their car or going on holidays, but are very reluctant to give away little luxuries. We’re seeing very strong growth, both in existing stores and new markets, [and] what we see is a larger and larger proportion of customers doing their main shop with us.”

The study comes as Aldi prepares to open its 500th Australian store at the end of this month, marking a significant milestone in the German discounter’s journey since setting up shop down under in 2001.

Aldi now has a 8.6 per cent share of Australia $100 billion supermarket sector, according to market research firm IBISWorld, with IGA and Foodland supplier Metcash falling further behind on 7.5 per cent. Woolworths continues to lead with 36.8 per cent and Coles is on 30.9 per cent.

Aldi, which is now around 10 per cent cheaper than Coles and Woolworths, estimates the average family saves around $140-$150 per shop, or somewhere around $1500-$1600 per year. “Extend that across all Aldi shoppers, they are saving $1.6 billion on their groceries per year,” Mr Daunt said.

He added that the biggest change since 2001 was there was “far more competition” in the market now, for which Aldi takes some credit. “Whether people shop with us or not, they’re benefiting enormously from Aldi’s growth,” Mr Daunt said.

“Our competitors in the meantime, due to increased competition, have invested in stores, products, and most importantly lowered prices.”

Mr Daunt said he wasn’t concerned about the imminent arrival of Amazon, with its grocery delivery service Amazon Fresh, later this month.

“I can’t talk with authority about the impact on the major supermarkets, what I can say is Aldi operates all throughout Europe and the US where Amazon has an enormous presence.

“We operate very successfully because our business models are fundamentally different. We keep things simple, bricks-and-mortar stores near where customers live, so cost-effective that we have always been able to deliver the best value in the market at the lowest prices.”

Mr Daunt said Aldi had “deliberately tried to avoid being distracted” by online models such as click-and-collect or home delivery.

“[They are] all things we could pursue but would distract us from the main game,” he said, adding that there were “inherent challenges” in Australia that made grocery delivery difficult.

“Customers that are willing to pay will derive some benefit, but I think we’re a long way away from that being a major part of the grocery landscape in Australia,” he said.

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