With higher inflation and other macro-economic pressures, many Australian households are tightening their belts. As consumers manage cost of living pressures, it’s led to a pullback in spending across the retail landscape, particularly in non-discretionary categories.
CommBank’s latest Consumer Insights Report shows that around one in four Australians have not enough, or just enough, to meet household expenses. These consumers are the most likely to be frugal, but the adoption of a more discerning mindset is more universal.
Most consumers confirmed they have recently reduced spending across all categories, particularly more discretionary goods and services. For example, 70 per cent are collectively spending less on pubs and clubs, fast food, and restaurants. The same is true for 55 per cent of consumers of recreational goods and 51 per cent in the electronics and entertainment category.
The survey confirms that those who are spending less across hospitality and discretionary retail categories are most likely to be redirecting those funds towards everyday expenses like rents, mortgages or to pay their increasing utility bills. In fact, consumers indicated that on average, they were reallocating approximately $450 per month, largely towards essential goods and services or savings.
However, spending alone is only part of the picture. Looking closer at consumer behaviours confirms a broad shift in shopping choices and heightened customer experience expectations.
For example, the research shows that 73 per cent of consumers are using promotional codes, cashback offers and rewards to make their dollar go further, and 66 per cent are doing more research before purchasing. Turning to trusted brands is also expected to remain a priority for many consumers. This suggests that while consumers have reviewed how they shop in the current economic climate, many will be more selective over a longer-term horizon.
The rise of a more value-driven shopper directly impacts retailers’ strategies to attract, win, and retain customers. As consumers favour interactions that save time and money, we explore how retailers can respond at each stage of the customer journey and where digital experiences play a significant role.
Enhancing product and brand discovery
Not only are most people doing more research, but they are searching across more than six channels to find products. In-store browsing is still the most popular method, but more people use online search as their first choice. Younger consumers are also more likely to be using social media, mobile apps and seeking video content.
In these early stages of finding a product or brand, many consumers value technology that aids relevance and bridges the digital and in-store divide. Among consumers, the top-rated technologies include the ability to check in-store stock availability before going in-store, search filters that align with their needs or budget, and in-store information kiosks, digital devices, or interactive displays.
Essentials when purchasing
When making a purchase, Australian consumers have made their must-haves clear. Almost two in three consumers say that enhanced cyber security protection of personal data is non-negotiable, with a further 27 per cent saying it is nice to have.
That’s followed by friendly and informed staff and a positive in-store experience. From there, technology features heavily among purchasing prerequisites. Over one in three say a range of payment options that support a fast checkout and flexible delivery options that align with personal preferences are a must-have.
Creating data confidence
When asked directly, 85 per cent of consumers agreed retailers should use technology that personalises the experience and enhances purchasing processes. However, amid fears of cyber security breaches, scams, and fraud, most express concerns about how brands use data and are unwilling to share personal data that can underpin personalisation.
More than eight in ten consumers agree that businesses should be more transparent about data sharing and want the ability to view, update, and delete their data. In addition, 64% of refuse to purchase from retailers that request unnecessary information.
Maintaining customer loyalty
Delivering a shopping experience that keeps people coming back spans all aspects of the customer journey. However, some missteps are more likely to be forgiven than others. Overall, 65 per cent of consumers have encountered a poor shopping experience in the past year; of those, almost half (43 per cent) say they’d stop buying from a retailer if these issues arise.
While stock availability issues were the most common, consumers appear to be more forgiving, they tend to have a milder impact on loyalty. On the other hand, problems encountered online, such as a poor website or app experience or inaccurate online information, were less frequent but more likely to turn consumers away for good.
These are just some opportunities for retailers to uplift the customer experience in light of changing needs and preferences. Our Consumer Insights Report looks more deeply at these and others. It steps through what consumers across retail categories value most and, crucially, what they now expect at each stage of their purchasing journey.
To get your copy of the report go to insideretail.com.au/client-report/commbank-consumer-insights or click here
Learn more about how CommBank can support your business go to commbank.com.au and search ‘Industry Banking Retail’ or visit commbank.com.au/retailers
About the Consumer Insights Report
CommBank Consumer Insights is an exclusive, wide-ranging analysis of the Australian consumer. This edition focuses on understanding consumer attitudes, motivations and expectations of their experiences amid changes to the real and digital economy.
This edition is based on an online quantitative survey conducted by Fifth Quadrant on behalf of the Commonwealth Bank. The survey was conducted in May and June 2023 and was completed by 5,279 consumers of goods and services. Each respondent answered questions relating to one category where they had spent money in recent months, including: Groceries and liquor (n=406), clothing, footwear and accessories (n=406), homewares and household appliances (n=408), consumer electronics and entertainment including books, games, music and media (n=404), recreational sporting and outdoor goods (n=407), motor vehicle parts and accessories (n=406), health and beauty products (n=406), hardware, DIY, building and garden supplies (n=407), personal care services including hairdressing, beauty and weight loss treatments (n=406), fast food and quick service restaurants (n=405), pubs and clubs (n=408), restaurants and cafes (n=407), and accommodation (n=403).
The report has been published for general information purposes only. As this information has been prepared without considering your objectives, financial situation or needs, you should, before acting on this information, consider its appropriateness to your circumstances, if necessary, seek professional advice. The Bank believes that the information in the report is correct and any opinions, conclusions or recommendations are reasonably held or made, based on the information available at the time of its compilation, but no representation or warranty, either expressed or implied, is made or provided as to accuracy, reliability or completeness of any statement made in the report. Any projections and forecasts are based on a number of assumptions and estimates and are subject to contingencies and uncertainties. Different assumptions and estimates could result in materially different results. All analysis and views of future market conditions are solely those of the Commonwealth Bank.
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