Understanding the real value of new shopper values in Australia’s cost-of-living crisis
The record high cost of doing business is passing on price increases to value-craving Australians, which is hitting households hard as we grapple with the soaring cost-of-living. The CommBank Household Spending Intentions retail spending index fell by 21.3 per cent in January1 and Buy Now, Pay Later debt is at its highest2. Reeling from a tenth consecutive interest rate hike, three-quarters of us are concerned about paying general household bills (72 per cent), food and groceries (77 per cent), while half are worried about the cost of petrol (54 per cent) and rent or mortgage payments (46 per cent).3
Aussies are also more focused on what we fill our trolleys with at the supermarket – and when. Average supermarket retail trips per shopper was down -3.7 per cent in January but we are starting to see an increase. Importantly, dollar sales are up +4.7 per cent, but more recent trading hints at an inflationary-led acceleration in sales growth while the +4.2 per cent uplift in dollars per trip is being driven by higher prices helping to compensate for the smaller baskets.4
Value is driving brand switching as four in five Aussies stock up on products on sale
Our latest research reveals that three-quarters of shoppers now always compare prices, and seven in 10 are likely to make unplanned purchases after seeing promotions and discounts and are brand switching for new and appealing features or benefits. Two-thirds tell us that retailer/own-label products are a good alternative and three in five now make a shopping list and stick to it and make product purchase decisions when in the store. But almost seven in 10 are also shopping online the same or more than a year ago too.5
It's also important to understand generational values and nuances of Aussie shoppers as sustainability (younger Aussies) and personal choice (older people) are also behind brand switching tendencies. Millennials6 are set to overtake Baby Boomers7 as the largest generational group in Australia and are already the biggest-spending consumers in both bricks and mortar stores and online. Millennials and Gen Z together are a rising force in retail shopping, currently accounting for 36 per cent of total retail spending in Australia and forecast to account for 48 per cent by 2030.8 Gen Z in particular “presents tremendous opportunities for brands and retailers, but these digitally native, fiercely independent consumers approach shopping with very different expectations than prior generations. Gen Z expects brands to be authentic and understand them as unique individuals to earn their dollars…"9
Your customer data is the critical link to winning with individual shoppers in this cost-of-living crisis
We are cautiously optimistic for 2023 but expect value-based shopping behaviours to continue to define the year. Successful brands and retailers must differentiate their customer types and quantify their sales contribution to prioritise initiatives. Clearly, there are many headwinds, so now, more than ever, you need to know how people feel and how they’ll shop in the moment. It’s all about the experience they have and how it relates to their new values – both on and offline. Australians are open to ordering directly from you and sharing their data if it will result in a better shopping experience or reward.
Shopper data will also help you manage the social impact of inflation by differentiating and communicating what’s right from profit gain, and supporting your customers by delivering and communicating price, value and experience. You need to show your customers that you're going through this cost-of-living crisis with them. Honesty and transparency underpin a solid relationship, especially during disruptive times. Getting your data and your omni-channel customer experience synchronised is critical for an integrated lens on how the same shopper uniquely uses each channel on their disruptive path to purchase.
- In original terms. B Allen, HSI - Household Spending Intentions, CBA Household Spending Intentions - February 2023, CommBank, accessed 14 February 2023
- J Beazley, Cost-of-living crisis drives vulnerable Australians to buy now, pay later schemes, consumer groups say, The Guardian, 24 January 2023, accessed 14 February 2023
- Circana, AU Household Weight Jan 2023; base n = 4,697
- Circana Shopper Panel
- *Agree or strongly agree. Circana, AU Household Weight Jan 2023; base n = 5,031
- 25-39 years old, 5.4 million people.
- 55-74 years, 5.4 million people.
- S Mitchell, Retailers alert as Millennials, Zoomers take over from Boomers, AFR, 7 July 2022, accessed 14 February 2023
- L Gillis, Media Release: IRI and The Female Quotient Publish Research Guiding Marketers in Connecting with Powerful New Shopper Population: Gen Z, 25 May 2022, accessed 28 October 2022