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What recession? No travel, so we're spending up big on little luxuries

Business

Brisbane businessman David Ahmet said it didn’t make sense but instead of sales plummeting during the pandemic his company boomed and profits for the year were at least $5 million more than expectations.

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The company he heads, Motorcycle Holdings, had a dip in sales in April but then a record month in May which has carried over into June.

Brisbane BMW reported a similar spike. Sales in May were up 70 per cent on the previous year.

The NAB also said mum and dad investors had shown record levels of engagement in the sharemarket through the pandemic despite the prospect of swimming against the tide.

Retail sales also surged, but off a very low base.

Ahmet’s Brisbane’s Motorcycle Holdings, which has 48 franchises along the east coast, had hunkered down after the March lockdowns by shedding staff and preparing for a dire few months.

The reverse happened. It’s now looking at a profit of between $24 million and $27 million for the year, rather than the expected $19 million.

“I don’t know what caused it. They came out of the woodwork, that’s for sure,” Ahmet said.

“I think they were looking for an activity. The pubs were shut, there was no footy or overseas travel so they bought a motorbike.”

He said it was clear that a lot of buyers were using money withdrawn from their superannuation.

“I’m still cautious about the future, though,” he said.

“The increase we saw was disproportionally strong. It does not make sense, but for whatever reason there was a significant material increase in sales.”

The NAB said new applications to nabtrade increased by 360 per cent in past quarter with a lot of interest in the distressed airline and travel industry shares in anticipation of restrictions lifting.

Working from home had also led to people trading more.

“Investment in offshore markets also hit a new peak in March, with trading values trebling at a time when investors were finding a unique way to capitalise on stunning oil price moves,” the NAB said.

QUT Business School’s Professor Gary Mortimer said it showed there were different types of consumers: some cocooned at home and saved while others sought a hedonistic lifestyle and spent up.

He said he had also heard of women spending significant amounts on beauty therapies, which had been dubbed the “lipstick effect” after it was found that during World War II, women still bought lipstick despite having little money because it was the one thing they could still do that made them feel good.

He said people also had a “mental wallet” where they accounted for money and if they had saved for an overseas holiday and couldn’t take it they would instead spend it on something fun.

The use of superannuation money for a motorbike was, he said, instant gratification.

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