Circana, the consumer behaviour advisor, has identified significant shifts in Australian shopping habits, driven by the rising cost of living, in its new report titled, Shifting Shopper Behaviours.
The report is part of Circana’s 2023 FMCG Outlook series and it outlines numerous challenges and opportunities within the industry as consumers adjust their buying habits to weather the economic storm brought on by rising living costs.
Circana’s Head of Product and Solutions, APAC, Alistair Leathwood, remarked, “In the face of soaring living costs, we are witnessing rapid behavioural changes among consumers. Shopping habits will continue to evolve swiftly as household budgets tighten and price and value become the centrepieces of purchasing decisions. Brand loyalty and consumer values will be tested in these tough economic times.”
The Circana Shopper Panel, a mechanism for gauging shopper sentiment, has discovered that a whopping 93% of Australians are ‘somewhat or extremely concerned’ about the impact of inflation. As inflation continues to take a toll on the average consumer, insights into shopper behaviour are becoming invaluable for manufacturers and retailers as they strategize for the future.
The report explores several key themes pertinent to brands and retailers:
- Impact of Inflation: With 72% of Australians concerned about the cost of general household bills, 77% worried about food and groceries and 46% anxious about their rent or mortgage payments, the cost of living has taken centre stage in consumer sentiment. This, in turn, has led to a discernible trend of Australians prioritising essential items over discretionary ones.
Leathwood noted, “Australia’s grocery channel is a $120 billion industry, with dollar sales and unit prices increasing by 6.8% and 8.6% respectively compared to the previous year. This reflects the broader narrative of essentials now experiencing faster price increases than discretionary items. The rapid changes in shopper behaviour across the country is testament to the financial pressure that households are experiencing.”
- The Value Factor: Value has emerged as the overriding priority when Australians decide to change brands. 68% of Aussies are more likely to make unplanned purchases when they see discounted products or promotions, and 69% would switch to a new brand if it offered appealing features or benefits. A significant 80% stock up on products when they are on sale, and 56% of Australians have tried a new store or brand due to perceived value.
“Retailers and manufacturers need to show shoppers that they empathize with them during these challenging times,” Leathwood advised. “Honesty and transparency can bolster the retailer-consumer relationship, particularly during a period of disruption.”
- Value versus Sustainability: Surging living costs have led Australians, like their global counterparts, to prioritise affordability over sustainability for the first time since the onset of the pandemic.
Leathwood observed, “Despite 68% of Australians trying to purchase locally sourced products over imports, and half of them still attempting to buy eco-friendly products if possible, the cost of living crisis is forcing a rethink of what constitutes sustainable consumerism. There’s a challenge for brands and retailers to deliver sustainability affordably to retain customer loyalty.”
- Omni-Channel Shopping: The report highlights that the COVID-19 pandemic has firmly entrenched omni-channel purchasing in consumer habits, with omni-channel shoppers typically spending more than their counterparts who only shop in-store or online.
Brands and retailers must put shoppers at the heart of their strategies. “Fast-tracking investment in data technology and shopper solutions will provide a comprehensive understanding of who your shoppers are, and how to satisfy them,” Leathwood said.
- The Data Imperative: As Australian consumers adapt their shopping habits, their expectations of brands and retailers are changing too.
“Understanding the factors that influence or disrupt shopper behaviour will allow manufacturers and retailers to adapt their strategies to better meet specific needs,” Leathwood explained. “Investment in valuable data is not a cost, but a powerful solution to deliver return on investment.”
The report concludes that the shifts in shopping behaviour are largely a result of innovations catalysed by the COVID-19 pandemic and the pressures of the current cost of living. Australian consumers’ attitudes mirror global trends, prioritising affordability in their purchasing decisions. As cost of living pressures mount, brand loyalty is being supplanted by the search for value for money.
Furthermore, while sustainability continues to be a key consumer concern, escalating living costs are forcing many to choose affordable products over pricier ‘green’ alternatives. However, as Leathwood notes, “Finding ways to deliver sustainability in an affordable way should be the key priority to achieve greater share of wallet.”
The insights provided by Circana’s Shifting Shopping Behaviours report highlight crucial issues that FMCG businesses must navigate carefully. Through the effective use of consumer data and investment in omni-channel experiences, retailers and brands can adapt to the rapidly changing consumer patterns in this era of high inflation.
For more about the survey and insights, visit Circana’s website.