Aussies opt for brand swaps and cheaper alternatives amid cost of living crisis
Consumers are altering their shopping habits during the worsening cost-of-living crisis, decelerating the retail purchase journey.
A Mediahub study reveals that three in five people in Australia and New Zealand are switching to cheaper products or delaying purchases altogether.
Shoppers are also investing time in exploring better deals to seek out the best value for money, with over half of people surveyed stating this was a factor when choosing a brand or product.
Mediahub ANZ chief strategy officer Linda Fagerlund said the shift in consumer behaviour is challenging brands to adapt quickly.
“Understanding consumer behaviour and discretionary spend across retail categories, income levels and consumer life stage segments is imperative for brand survival in the face of a worsening economic downturn,” she said.
“That’s why we’ve undertaken this study; to provide a deeper understanding of ANZ’s current retail landscape and the social, economic and cultural dynamics at play affecting consumers, and how brands and marketers need to adjust to drive growth.”
The data revealed that the pinch is being felt across all demographics with, 58% of Australian higher-income earners, and 56% of low-income earners delaying purchasing a product. 40% of high-income earners and 51% of low-income earners surveyed chose not to buy a product altogether due to cost of living pressures.
Fagerlund said this is a pattern of consumer behaviour that brands across all sectors need to be aware of.
Amidst growing economic challenges, grocery spending is either declining or plateauing across all consumer segments. Notably, 45% of Australians and 36% of New Zealanders reported purchasing groceries less regularly over the past 12 months.
Fagerlund continued: “For brands, this pattern presents a double-edged sword and requires greater flexibility in developing marketing strategies. On the one hand, brands need to capitalise on new potential growth from customers seeking better value offers but also need to defend from competitors for existing customers who are in a high “switch” mindset.
“It’s a delicate balance. Ultimately, brands need to continually look to ways to reframe and communicate their value over and above just price and promotion.”
The study also showed that 68% of Australians and New Zealanders cited cost-of-living or economic turbulence as their primary concern. This reveals a secondary trend: while Australians are feeling anxious and less secure, they continue to maintain the most optimistic outlook. In contrast, New Zealanders view the cost-of-living crisis and related financial stresses as their main concern.
The broad spectrum of emotions, from optimism to caution, is influenced by different age demographics, with those under 35 skewed towards optimism, while those over 35 are more cautious.
Fagerlund concluded: Brands need to apply empathy and not shy away from the realities of the cost-of-living crisis and the anxious age we are living in, when planning how best to connect with their audiences, regardless of income.”
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