What do Australians that haven't seen a decent pay rise or whose wages are moving backwards spend their money on? It's more likely clothes, a handbag or a washing machine than food and groceries.
A picture of a curious-looking new consumer is emerging in the wake of an economy now characterised by weak inflation and very low wages growth.
![Buying the fridge rather than the food: A shopper looks at refrigerators at a Harvey Norman store in Sydney.](/web/20160910214808im_/http://www.smh.com.au/content/dam/images/g/r/a/y/8/t/image.related.articleLeadwide.620x349.gramti.png/1473251936409.jpg)
Most of us still have jobs - albeit lower paid ones if you previously worked in the once-booming mining sector and related industries.
And rather than paring back on those big ticket items, discretionary gadgets or clothes, we are spending relatively less on supermarket staples.
Deloitte Access Economics reports that inflation-adjusted retail sales grew at a pretty modest pace of 2.5 per cent in the 2015/16 financial year. But food retailing was essentially flat-lining, increasing only 0.7 per cent while non-food retailing was ahead by a comparatively robust 3.4 per cent.
It's an outcome that turns traditional retail theory on its head. The staples like food are meant to avoid the gyrations that are caused by economic cycles. The whole notion that we all have to eat has been the reason that in uncertain times we look to stocks like Woolworths for those reliable earnings.
Similarly, in times when there is virtually no wages growth investors wouldn't be wading in to buy shares of discretionary goods retailers such as Harvey Norman or Myer.
Turning traditional theory on its head
But the portrait of the typical consumer appears to be changing a bit.
![The arrival of fast-fashion chains such as Zara and H&M has ramped up competition, with consumers proving keen on ...](/web/20160910214808im_/http://www.smh.com.au/content/dam/images/g/r/a/y/2/s/image.related.articleLeadwide.620x349.gramti.png/1473244510559.jpg)
In the first instance, while our personal income isn't improving, we are feeling more confident about retaining our jobs - thus consumer confidence is reasonably strong.
Part of this more confident attitude from consumers can be put down to the fact that on paper at least the value of our homes (usually our biggest investment) has risen hugely over the past couple of years.
And for those with mortgages some - perhaps all - of the pain of stagnant salaries has been offset by shrinking interest rate repayments.
We are also pocketing some additional spending money by savings less of our income, which is appears to be going towards consumer goods.
It's been well documented that during times of property price inflation consumers will spend up big on home-related items from hardware for renovations and improvements to big-ticket items like furniture and whitegoods.
One need look no further than the record results from the likes of Harvey Norman and Bunnings to bring home that point.
And the fast-paced changes in technology account for the money spent on items like iphones and computers.
Why is apparel feeling a tail wind? The simplest answer is that the retail offer has improved. Over the past couple of years our two major full-service department store chains have overhauled their products and are starting to ramp up their investment on service. They too have been spurred into action by the influx of international retailers like H&M; and Zara introducing competition. There are now a plethora of new apparel retailers offering clothes at cheaper prices - all of which is simply spurring demand.
But why are we spending less on food and groceries? Part of this can be explained by the supermarket price wars, sparked by the rising competition between the two major chains, Woolworths and Coles, and the expansion of German grocery discounter Aldi.
And to some extent Australians are taking advantage of the lower-priced supermarket home brands that are expanding shelf space at the expense of the more expensive, branded products.
Deloitte takes the view that "while supermarkets have survived the competitive environment by pushing down supplier prices, costs may not have much further to fall and profits are being squeezed. Supermarket and catered food operators are now relying on population growth to increase their sales, as real retail turnover per capita decreases.'
David Rumbens, the author of the Deloitte report, predicts the growth in the volumes of groceries being sold will slow further from 1.2 per cent in 2016 to 0.8 per cent next year, before recovering in the years to 2021 to deliver a five-year average of 2.6 per cent.
Such an outcome would augur poorly for Coles and Woolworths, which are already operating in a deflationary market in pricing terms. They're fickle, those new-type consumers.
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