Local Spending in City of Melton increases
The City of Melton’s October Spendmapp data for October was released by our data provider Geografia earlier this month and as always, you can find the report on the Melton City Council website available for download.
October saw a sharp drop in resident escape spend which reversed the sharp increase in September, a likely effect of the Victorian school holidays. In conjunction with only modest monthly growth in July and August this drop results in year-on-year growth that is well below recent levels of inflation and typical population growth in the City of Melton.
At the same time online spending recuperated only slightly, from its 6.3% drop in September, with events such as Amazon Prime Big Deal Days (10-11 October) and Click Frenzy Main Event (24 October) possibly contributing to this turnaround. Overall, online spending continues to plateau and even registered its first year-on-year decrease in October. To match the level of November 2022 online spending it would require an increase of 7.4% from October to November.
Both trends, circled red in the table below could be a sign of household budget pressure as people hold on to their money, weigh up discretionary online spend on a month-by-month basis or spend less while out and about for both work and travel.
Source: Compiled with data from Spendmapp by Geografia
Visitor spending on the other hand (circled green in the table above) continues to grow at a healthy pace in the City of Melton, and in doing so, bolsters our Total Local Spend growth (TLS is the sum of Resident Local Spend + Visitor Local Spend).
Within the Visitor Local Spend category, Dining and Entertainment continues to show strong, positive momentum, both during work hours but in particular during non-work hours.
Dining and Entertainment spending grew by 18% in October (year-on-year, visitor spending, non-work hours).
It is important to note that visitor local spending does not only come from people that are visiting our municipality for work or leisure purposes. As an expenditure type, Visitor Local Spend includes any transaction between a non-resident, individual or business based outside of the City of Melton, with a business within our city, i.e. any external demand met by a local supplier.
Looking at Resident Local Spend, the other expenditure type that makes up Total Local Spend, we can see only modest monthly increases over the past three months. As a result, the year-on-year growth for October sits at 7.4%, the lowest for the current financial year.
External demand and money staying local
The ongoing shift and the different momentum in escape spending and local spending can be seen more clearly when we look at the share of each spending category over the course of the year as a percentage.
The table below shows the steady level of online spending share and the gradual shift and reversal between escape spend and local spend proportions.
Source: Compiled with data from Spendmapp by Geografia
One explanation for the trends described above is increasing pressure on household budgets from high inflation and increasing cost of living expenses. According to Spendmapp by Geografia, three out of the top five expenditure categories that contributed to resident escape spend can be classified as Discretionary Spending categories. I.e., spending with Dining and Entertainment, Department Stores and Clothing, and Specialised and Luxury Goods merchants.
Whilst Transport spending is not classified as discretionary, a decrease in consumer movements and trips to shopping destinations such as the Melbourne CBD and major shopping centres, will also reduce transport spending associated with these trips.
We will continue to monitor how all our spending categories develop in November and towards the end of the year and compare peak spending levels for 2022 and 2023 in one of our next reports.
Top 5 Resident Escape Spend categories (October 2023). Source: Spendmapp by Geografia
Interestingly, two out of Spendmapp’s four expenditure categories that are classified as discretionary spend, Dining and Entertainment, and Travel, are showing growth trends at resident local spend level as shown in the timeseries below.
The other two discretionary spend categories, Department Stores and Clothing and Specialised and Luxury Goods, on the other hand, are at levels that are similar to, or slightly lower than, spending at this time previous year (before considering inflation and population growth).
It is possible that local businesses, in particular Dining and Entertainment operators, may be the main beneficiaries of a more locally focused, budget conscious lifestyle during the current, difficult economic times.
Resident Local Spend (Discretionary Spending categories). Source: Spendmapp by Geografia
Consumers respond to improved local offering
The trend that more money is staying local, and coming in from outside of the City of Melton, can also be a result of improved local service and product offerings, both in terms of new buying options and due to an increase in the quality of goods and services.
With every new business and service provider, Melton residents, as well as visitors and external businesses, are presented with new local buying options, which in many cases these would have been met by a business or service provider outside of our city for reasons of lack of local supply or lack of quality.
With a thriving business environment there are many new businesses, but also existing ones that are experiencing growth, making a name for themselves in the City of Melton and beyond. We invite you to meet some of those businesses by watching the City of Melton 2023 Business Excellence Award finalist videos. You can find the list of winners from this year’s 2023 MBEA on the Venture Melton Business Network Website.
With many new industrial, bulky goods, and restricted retail zones, along with local town centres, currently under planning and development, it can be expected that escape spend will continue to decrease its share in overall spending whilst total local spend can be expected to grow.
Follow these links to see what’s coming up in the City of Melton
Junction Sixty-Five: Melton's new retail landmark
Construction underway for CS Square’s latest extension
Thornhill Park’s $45million town centre
Most recently the City of Melton economy has shown a high level of resilience with a noticeable, diverging trend of Total Local Spend numbers for Melton and Victoria in the months between April and August 2023.
Total Local Spend, Timeline until August 2023. Source: Compiled with data from Spendmapp by Geografia
This trend is encouraging for the many new businesses that have invested in the City of Melton, and for those that are getting ready to make their mark in the City of Melton in the future.
Have a story to tell, ready to invest?
If you have a positive business story that you would like to share with our community, or if you are interested in looking at industry specific spending data or suburb level spending trends to inform your investment decisions, please reach out to our team and we will be glad to assist in any way that we can.
You can contact the Venture Melton team by completing this form or by calling 03 9747 7157.