The 2015 budget is due to be announced this month but general market moral has been weakening. Consumer confidence has been wavering and this is taking its toll on Australian businesses and their financial predictions. Dun & Bradstreet’s latest survey showed that business expectations sat at 49% for those who expect no impact, 23% who are unsure, 15% who anticipate a negative effect whilst only 13% believe in a positive outcome.
The general consensus that we can take from these percentages is that businesses believe the budget is going to be somewhat dull and uninspiring. The Business Expectations Index is an aggregation of surveys taken to measure companies sales, profits, employment and investment expectations, however all results show a decrease since the beginning of 2015.
The greatest barrier to growth this year in many businesses eyes is weak demand and reduced consumer confidence. Steve Brown, director at Dun & Bradstreet Australia and New Zealand has consistently mentioned that since the beginning of the year, weak projections will deliver a wake up call to businesses that 2015 will not be the year the economy breaks out of its rut.
He said, “The reality has hit the outlook for business activity, which has been steadily building through to the beginning of the year along with strong levels of optimism and growth. There is now a clear cooling in expectations that we expect will continue this year as business’ pull back their earlier optimism.”
This could be good news for customers, however, in the sense that companies might be fighting more to win new business and attract clients from competitors. In the eyes of retailers, this makes each customer more valuable and therefore could result in us seeing a slight increase in competitive pricing models and vouchers becoming available to us.
Take for example an interesting and engaging mystery discount campaign recently launched by Hallensteins. This promo offers customers a mystery discount of between 20 – 100% off your order online or in store if you submit your email address via a landing page on their website. Now these guys are already competitively priced if you look at the style and quality of their clothing. So when you consider that they're willing to offer up to 100% off in an attempt to gain new customers, this certainly lends itself towards a retailer giving the impression of reacting towards the weak market outlook.
Another level of generosity in this promo is the fact that these discounts are not only applied to full priced items, but also to any sale or promotional items as well (e.g. multi-buy offers). Another possible piece of evidence that Hallensteins is reacting to market forces was brought to our attention by deal hunter 'Captainjack' in this deal. He made use of two email addresses to receive the mystery discount vouchers and received a 30% off and a 40% off voucher, both of which are above the average level of discount we see being released by Hallensteins throughout the year. He could have just been lucky, although the implication here is that Hallensteins aren't just pumping out base rate 20% off vouchers en masse with only a handful of customers being rewarded with anything higher. This shows a genuine intention to offer as much value as possible in order to successfully acquire and/or retain customers.
Note: these discount codes expires on the 10th May 2015.
Going back to the market outlook, whilst the optimism and expectations remained strong amongst companies throughout 2014, unfortunately the GDP growth didn't follow the same pattern. This has also taken a toll on the unemployment outlook, which for the last seven months has shown resilience. Yet weaker predictions have meant it has dropped for the first time during that seven month period.
Companies that were surveyed by Dun & Bradstreet reported expected selling prices by companies had fallen each quarter as the official inflation rate decreased. This is good news for consumers looking to receive better prices on their goods, shifting power from companies hands back into ours, so to speak.
“The softening in a range of business expectations is continuing, with firms scaling back their outlook for sales, employment, capital investment and selling prices,” mentioned Stephen Koukoulas, economic adviser to Dun & Bradstreet.
The budget last year saw a variety of winners and losers and whilst it was a different economical landscape last year, there will be some similar trends. The so called ‘winners’ in last years budget were small to medium sized businesses due to a 1.5% company tax cut, school chaplains who were given $245 million over five years and new mothers who were to be paid up to $50,000 through the Paid Parental Leave Scheme.
The ‘losers’ were among the sick as the government made cuts to hospital spending, 16,500 public servants were made redundant and families who experienced cuts to family tax benefits. The pension age also rose to 70 years of age whilst a more expensive fuel levy was added to motorist’s bills.
Although the outlook for this years budget can be difficult to predict, what we do know is that amidst the weaker financial outlook on companies predictions, we can at least find comfort in the likelihood of more attractive deals, vouchers and coupon codes being released by retailers to attract our business.
Take for example Woolworths Online who currently have a voucher offering you the chance to win a bunch of flowers every month for a year when you spend over $100 online using their coupon code.
Then there's Winemarket, a competitor of Woolworth’s alcohol brand Dan Murphy’s, who is running a 30% off voucher code which gives you $20 off a minimum spend of $70 when you use their coupon.
But, besides the short victories to feed our retail habits its also nice to know that certain information released by Mr. Abbot recently has suggested that another 1.5% tax cut will be implemented for small businesses on the 1st July 2015. Family packages are also set to improve as the Prime Minister announced an $840 million fund for preschool funding and more security for consumer’s money if their bank were to collapse.