Cash-strapped WA consumers are increasingly spending more on repairs rather than purchasing replacement items as the persistent cost-of-living crunch bites into budgets.
Fresh credit and debit spending data from Bankwest revealed repair shops posted a 22 per cent growth in value in the year to May, and up 6 per cent month-on-month from April.
Bankwest Curtin Economics Centre senior research fellow Daniel Kiely said consumers were likely trying “to get a bit more life” out of their existing items, rather than purchasing new ones.
He named cobblers, tailors, watchmakers and mobile phone repairs as some examples that fall within the spending category. Dr Kiely said mobile phones in particular were “such a big expenditure” for households.
“Previously, where people may have had a cracked screen and may have gone and replace the entire phone, they’re probably now looking to replace that screen to minimise costs,” he said.
“It’s forcing us to make better use and more use of our existing products and there could be some benefits from that for the environment, for landfill.”
But the Bankwest data also revealed repair shops posted a 29 per cent decline in the number of customers transacting, and a 13 per cent drop in volume growth year-on-year.
“Part of that growth in value is not necessarily a growth in the number of unique customers, it seems to be more of a growth in the costs of these transactions,” he said.
Mandy Lin and Tim Hong, pictured above, have owned their repair shop Mr Tech Northbridge for nearly a decade and said the economic challenges had shifted people’s appetite to buy replacement items.
Ms Lin said most of its customers were coming in to get their mobile phones and laptops repaired.
“Customers would rather repair an item than buying a new replacement,” she said.
“It’s actually the older generation who are still the ones coming in to get things repaired, I guess because they are used to holding onto things for a long time.
“Also those with families too are opting for repair because they are more likely to have a mortgage.”
The Bankwest data revealed West Australians recorded a fifth consecutive month of declining spending — with the number of customers transacting down 0.6 per cent; and transaction volume and value both down one per cent month-on-month in May.
Year-on-year declines in the number of customers spending at electric appliance (down 9 per cent), retailers and sporting/toy stores (down 6 per cent) also highlighted the ongoing trend of consumers pulling back in discretionary sectors.
Only seven of the 25 spending categories tracked by Bankwest grew in the number of customers transacting year-on-year, but none of those were significant — with the leading category of mail orders only growing by 3 per cent.
Bankwest products and digital services general manager Peter Bouhlas said Western Australians were now being “really selective” in where they spend their money.
“A 17 per cent decline year-on-year for recreation is a significant fall, and we can see across the board that the vast majority of sectors are experiencing customer and transaction volume declines,” he said.
“A positive in the data is in the majority of sectors showing a stabilisation — and, in some cases, a reduction — year-on-year in the average value of transactions, which indicates cost-of-living pressures might be softening.
“That is perhaps not a surprise when considering the customer and volume declines, with reduced demand and spending capacity naturally likely to have a flow-on effect for prices.”
With the Reserve Bank still not ruling anything in or out on its next move on interest rates, Dr Kiely expects more consumers to become increasingly conscious about budgets.
“What we’re also seeing from the Australian Bureau of Statistics data is a decline in the household savings ratio,” he said.
“You’re certainly seeing there that families are not able to save us much, and therefore will have to be a lot more cautious in their expenditure patterns.”
The RBA left the cash rate on hold at 4.35 per cent last week. Governor Michele Bullock has previously said data on inflation pointed to demand still being too strong.