Macquarie has run the numbers on where Australian consumers are spending their money, and there are some clear winners and losers that come out of the data.
The broker collects what it calls "high frequency consumer data", which gives a snapshot of where people are spending, and also where they are pulling back.
Where are we spending?
The data collected for October this year shows that travel and electronics were the two biggest winners in terms of growth in "share of wallet" over the past 12 months, while utilities, government services, and alcohol and tobacco experienced the largest declines.
The Macquarie team said consumers remain selective.
As they said:
On a wallet share basis, our data suggests the consumer remains selective in spending. Discretionary categories such as travel, electronics and online are taking share as shopping (with specialty) loses wallet (jewellery, apparel, footwear etc.). By category, the major positive was furniture returning to positive growth in October versus the previous corresponding period, following several quarters of improving, but still negative, declines.
Macquarie said the growth in furniture spending was consistent with recent solid trading updates from Harvey Norman Ltd (ASX: HVN) and Nick Scali Ltd (ASX: NCK).
Meanwhile, pharmacy continued to grow at around low-double-digits, we expect supported by health and beauty trends including rising use of weight-loss drugs. Finally, momentum in electronics was maintained, consistent with recent trends.
In terms of the key stock picks in the retail sector, Macquarie likes JB Hi-Fi Ltd (ASX: JBH), "following its recent pull-back, with the group well-placed to benefit from strength in recent tech releases (especially iPhone 17)''.
They also like Harvey Norman shares, with the tech tailwinds combining with furniture spending momentum to support the stock.
And in terms of the major supermarkets, they like Coles Group Ltd (ASX: COL), "as it continues to take market share with earnings benefiting from in-store execution and scale benefits in supply chain''.
Due to the relative weakness of spending on alcohol, Macquarie has an underperform rating on Endeavour Group Ltd (ASX: EDV) shares.
In terms of price targets, Macquarie has a $121 target on JB HI-Fi, compared with Monday's close of $97.84.
For Harvey Norman, its target is $7.40, equal to Monday's closing price, while for Coles, they are forecasting a price of $26.10 compared with Monday's closing price of $22.28.
They also have a bullish price target of $28.20 on Nick Scali shares compared with $24.11 at Monday's close.
