Australians are severely impacted by continual increases in interest rates and the cost-of-living, with more than three-quarters (77%) concerned about the cost of groceries and 72% concerned about general household bills, according to a new report released by leading advisor on consumer behaviour, Circana.

The latest instalment of Circana’s 2023 FMCG Outlook report series, Shifting Shopper Behaviours, identifies challenges and opportunities for the sector as Australian shoppers change their buying habits in response to cost-of-living pressures.  

Value is now the overwhelming priority when Australians make decisions to change brands. Seven in 10 are now likely to make unplanned purchases after seeing products on promotion or discounted (68%) or switch to a new brand if it offers new features or benefits that appeal (69%).

Eight in 10 (80%) now actively stock up on products when they are on sale and two-thirds believe that retailer/own-label products are a good alternative to branded products. More than half (56%) of Australians have tried a new store or brand due to perceived value.

Circana head of product and solutions for Asia Pacific, Alistair Leathwood said, “Retailers and manufacturers need to show shoppers that they are going through this journey and difficult period with them. Honesty and transparency underpin a solid relationship, especially during disruptive times. The cost-of-living crisis is hitting households hard. Circana research shows that value for money is the primary driver of shopping behaviour for most Australians.”

Australian spending habits are similar to global shopping trends, with almost all (96%) global consumers intending to adopt cost-saving behaviours over the next six months, while of the 40% who intend to increase in-store and decrease online shopping, they say it’s because the delivery costs are too high.

Sustainability on the rise but not number one priority

While the desire of Australian households with lower incomes to live sustainably is higher today than the overall pre-pandemic average, the 2022 shopper research highlights challenges to shopping more sustainably.

Four in 10 (41%) shoppers believed that sustainable products were priced too steeply while 21% believed that the quality of sustainable products was not consistent. The cost-of-living crisis in Australia is inadvertently forcing many people to think more sustainably, however this is not necessarily translating into the purchase of ‘green’ products at the supermarket checkout.

“Our research also indicated that half of Australians will still try to buy environmentally friendly products if possible, while 68% are trying to purchase locally grown/made products over imported products when available,” Leathwood said.

“All Australians are concerned by the ethical status of the products purchased and the companies that these products were purchased from. In particular, seven in 10 Gen Z consumers would pay higher for products that aligned with their purpose and core beliefs.

“Overall, affordability tends to be a leading factor in the decision making for Boomers and Gen X who are the bulk of the consumer market. Gen Z and Millennials include sustainability of a product and company core values as an added deciding factor when making purchases but increasingly buying behaviour is being impacted by affordability as cost-of-living bites.”

Omni-channel becomes most important part of the channel mix

The pandemic ushered in a new era of online purchasing trends that continue into the current post-Covid era, showing that omni-channel purchasing is a permanent fixture. Grocery retailers reported that omni-channel shoppers were particularly highly valuable, spending more than double compared with in-store only or online-only customers.

“As more of us shop online, retailers and manufacturers alike must treat and analyse online channels as shopper-led businesses using data and technology. Brands and retailers must put shoppers at the heart of everything they do. Fast-tracking smart investment in data technology and shopper solutions will provide a clear 360-degree view on who your shoppers are, and how to satisfy them,” Leathwood explained.

Globally, shoppers are increasingly savvy at using a mix of channels to inform their purchases. Physical retailer websites are most frequently used for product information, online marketplaces and e-tailers for price comparisons, retailer apps for seeking out promotions, and social platforms for future purchase inspiration.

“The whole umbrella experience considers every engagement, thought and feeling your customer has with your brand including how they engage on your platform, from search function to shopping cart, and it’s vital to deliver and connect on every touchpoint,” Leathwood added.

Data is critical to success

Brands and retailers that respond to individual shopper needs will come up on top. Knowing your shopper in the moment is key. Australian consumers expect value-based shopping so brands and retailers must differentiate their customer types and quantify their sales contribution.

“Through understanding the factors influencing or disrupting shopper behaviour, both manufacturers and retailers can more confidently adapt their strategies to better address specific needs and influence shopping behaviours to suit various shopper types on different occasions. The balance of power has shifted from retailers and manufacturers to the shopper,” Leathwood said.