Aussie spending threatened as restrictions rebound, says Zip

Just when we thought life was creeping back to “normal” a second wave of restrictions were announced across Aussie states and territories last week. 

Naturally, as many of us stepped out of our houses and headed to the hairdresser, a restaurant or pub, customer spending seemed to be bouncing back. 

But with restrictions rebounding across the country, those numbers are likely to take another dive. 

Co-founder and chief operating officer of Buy Now Pay Later platform, Zip, Peter Gray says that during June it looked like Aussie businesses were on the road to recovery. However, he questions whether or not it’s enough to help them survive the second-wave of restrictions in July. 

“Throughout June, consumer spending continued to rise and was getting close to pre-COVID levels across many key segments. Australians were reviving their love of dining out and were slowly returning to the pub,” he said. 

“However the recovery looks set to be tarnished as the nation’s second most populous city [Melbourne] and surrounds enter full lockdown measures for the entirety of July and into August.”

Spending trends in June 

According to data from Zip’s Weekly Spending Index, some industries and businesses were making progress last month but still showed numbers well below 2019. 

While restaurants and cafes were seeing more customers through the door they haven’t recovered to pre-COVID levels. And pubs and bars showed similar progress, however takings were still down by over 30% compared to the stats last year. 

Gyms also saw some recovery in June as they reopened across the country, with numbers at the beginning of the month sitting at -76% from last year but ended at -19%. 

General spending trends in June 2020

Source: Zip Weekly Spending Index 

The stats also showed that the use of cash has remained down with fewer Aussies visiting the ATM. In fact, 20% less made cash withdrawals last month, while online purchases climbed by 112%. 

Similarly, Zip says that retail spending via Buy Now Pay Later was at its highest rate so far this year (for both online and in store purchases). 

“We’re still seeing a continued trend away from cash in the Zip Weekly Spending Index which further reiterates that Australia could be close to cashless in the next few years. “The broad move to cashless payments has also been accelerated with buy now, pay later continuing to grow in popularity. The use of Zip, both in-store and online, was at its highest point in June than at any point throughout 2020,” Gray explained.  

“For businesses to continue to thrive, owners need to ensure that they’re offering their customers payment choice and the options their customers are demanding.”

Here’s a breakdown of how BNLP customers were spending in June: 

Buy now pay later trends in June 2020

Source: Zip Weekly Spending Index 

Buy now pay later shoppers

Back in May, Mozo research revealed that BNPL customers were spending less on non-essential spending items during the first lockdown period.  

Clothing was the most popular spending category during “iso” at 30%, followed by both groceries, and food and beverages at 12%. 

However, items like electronics, homewares and self care saw a drop in purchasing frequency.  

“There’s no knowing exactly how Aussies are going to spend as we hit a second wave of restrictions,” Mozo director, Kirsty Lamont said. 

“But looking at the data from the first time we went into lockdown, it is fair to assume that customers will start to rein in spending on discretionary items and take it back to the essentials. This unfortunately could mean a major setback on small businesses that have seen a slight growth in spending over the last couple of months.” 

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