The Global Economic Crisis and impact on the Australian utilities consumer

Introduction

This brief examines consumers' reactions to the recession, in particular how Australians are re-evaluating their spending patterns and becoming more value-conscious. In the utility market, we examine the extent to which consumers have struggled to pay their utility bills, have looked to reduce energy spend, or considered switching supplier since the global financial crisis began.

Scope

*Analysis of large-scale surveys of Australian households covering the general impact of the recession and specific changes to their utility use

*Insight on consumer reactions to the global financial crisis in terms of bill payment, energy reduction and review of their current energy supplier

Highlights

Australian consumers have become increasingly price and value conscious following the global economic downturn. Brand loyalties are under increasing threat as shoppers, for example, increasingly embrace private label.

The energy sector has been less affected by the recession as customers generally see their utility as being relatively competitive. However, consumers are almost twice as likely to look elsewhere for a supplier if they do not feel their existing supplier provides a competitively-priced service relative to the market as a whole.

Consumers are keen to obtain value for money as well as receive immediate benefits, seeking the latter through prompt payment discounts.

Reasons to Purchase

*Identify the impact of the recession on Australian energy consumers' abilities to pay their bills

*Assess the likelihood of switching for power and gas consumers, and how the recession has affected this

*Review methods being provided to customers to deliver more value for money

Report Highlights
Highlights

Australian consumers have become increasingly price and value conscious following the global economic downturn. Brand loyalties are under increasing threat as shoppers, for example, increasingly embrace private label.

The energy sector has been less affected by the recession as customers generally see their utility as being relatively competitive. However, consumers are almost twice as likely to look elsewhere for a supplier if they do not feel their existing supplier provides a competitively-priced service relative to the market as a whole.

Consumers are keen to obtain value for money as well as receive immediate benefits, seeking the latter through prompt payment discounts.
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OVERVIEW 1
CATALYST 1
SUMMARY 1
METHODOLOGY 2
HOW HAS THE ECONOMIC DOWNTURN AFFECTED AUSTRALIAN CONSUMERS? 3
Faced by a recession, consumer confidence has dwindled, but Australians remain positive 3
Australians believe their country is in a recession 3
Lower consumer confidence is driving Australian consumers to reappraise their consumption habits 3
The economic downturn has, however, not had a tangible impact on the lifestyles of the majority of Australian consumers 4
Australians are generally content with their quality of life despite being divided about the country's overall direction 5
AUSTRALIANS ARE RE-EVALUATING THEIR SPENDING PATTERNS AND BECOMING MORE PRICE CONSCIOUS 7
Amid the current economic fragility, many consumers are facing escalating levels of debt, financial uncertainty, wealth investment uncertainty, job insecurity and insecurities about the broader economic situation. 7
Consumers are managing their finances more closely with one quarter struggling to pay bills 7
Fewer consumers, however, report problems paying their utility bills 8
Australians are making greater efforts to save money 10
Australian consumers have become increasingly price conscious following the global economic downturn 13
Consumers are being attracted by opportunities to get more value for money 16
Summary 18
APPENDIX 19
Definitions 19
Sources 19
Further reading 19
Reports and briefs 19
Recession & Recovery website 19
Ask the analyst 20
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List of Tables
Table 1: Consumer survey: level of satisfaction with ""the general direction of how things are going"" and ""quality of life"", in Australia (compared with the global average), 2009 7
Table 2: Few Australian consumers report problems paying their utility bills 10
List of Figures
Figure 1: More than two-thirds of Australian consumers believe the country is in recession but a relatively small proportion of these 'strongly agree' 3
Figure 2: One-in-four Australian consumers feels that their lifestyle has not changed in light of the downturn 5
Figure 3: Australian consumers are divided about the direction their country is taking but this has not significantly impacted their perceptions on quality of life 6
Figure 4: Australian consumers are managing their finances more closely while a quarter of individuals report difficulties in paying all the bills 8
Figure 5: Few Australian consumers report problems paying their utility bills 9
Figure 6: Australians are generally reluctant to sustain their reliance on credit and express an increasing desire to save money 11
Figure 7: The global financial crisis has had a moderate impact on households' desires to reduce their energy consumption and costs 12
Figure 8: Customer churn increased as the Australian economy weakened 13
Figure 9: The majority of Australians feel their utility suppliers offer a competitively-priced service relative to others in the market, and are unlikely to seek a cheaper supplier in the next 12 months 14
Figure 10: Consumers are almost twice as likely to seek a cheaper supplier is they feel their power supplier is not offering a competitively-priced service 15
Figure 11: How have consumers looked to save money on their energy bills? 17
Figure 12: Datamonitor's Recession and Recovery portal will allow industry players to identify emerging opportunities and track events in the Australian economy as they develop 19
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