Kiwis Take Longer On Retail Journey As Cost Of Living Bites – Marketers And Brands Need To Adjust; New Research

Key NZ results include:

• Essentials remain the key priority for discretionary household spending: 82% of New Zealanders are prioritising groceries and food, followed by health and wellness (37%), and insurance (31%)
• Parents with Kids over-index on Health and Wellness and Travel, whereas SINKS/DINKs over index on Automotive
• New Zealanders are eager to get away – the study looked at how they would spend their money if their discretionary income increased, and their top priority is Travel, above spending additional money on groceries

Auckland, August 5, 2024: New research shows high rates of consumers are brand switching across all income levels in New Zealand and Australia, along with signs the typical retail journey is taking longer in the face of a worsening cost-of-living crisis.

Consumers are also spending more time in exploration and evaluation modes to seek out ‘value for money’ and better deals, according to the new retail consumer study called The New Value Economy undertaken by full-service media agency Mediahub. It reveals that three in five people in NZ are switching to cheaper products or choosing to delay purchases altogether.

Hugo Winter, GM Mediahub NZ said: “This research could not have come at a better time. Many New Zealand brands and businesses across most sectors and categories are doing it tough right now. For many, it is a war of attrition. It has allowed us to have many informed and valuable conversations with brands to help them navigate the current climate and shape strategies to redefine their value to budget-conscious Kiwis.”

Linda Fagerlund, Chief Strategy Officer, Mediahub ANZ said the seismic shift in consumer behaviour is challenging NZ brands to adapt and adapt quickly. “Understanding consumer behaviour and discretionary spend across retail categories, across income levels and consumer life stage segments is imperative for brand survival in the face of a worsening economic downturn,” she explained.

“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.”

Fagerlund said with purchase trade-offs happening at both low and high-income levels, “the pinch is clearly being felt across all demographics, resulting in purchase deceleration across the board from high end/luxury brands to mid-range and lower-cost brands. This is a pattern of consumer behaviour that brands across all sectors need to be aware of.”

The research also shows:

• ‘Value for money’ is driving purchase decisions with 54% of New Zealanders and 53% of Australians saying this is the most important factor when choosing a brand or product
• Across all consumer segments, grocery spending is in decline or experiencing a plateau, with 36% of New Zealanders and 45% of Australians saying they have purchased groceries less regularly over the past 12 months
• In New Zealand, 75% of high-income earners and 43% of low-income earners delayed purchase, and 51% of high-income earners vs 40% of low-income earners skipped a product purchase
• By contrast in Australia, 58% of higher income earners, and 56% of low-income earners delayed purchase of a product; with 40% of high-income earners and 51% of low-income earners opting to skip purchase of a product altogether due to cost-of-living pressures

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.”

Fagerlund said the study also showed that 68% of both Australians and New Zealanders voted cost-of-living or economic turbulence as their primary concern, revealing a secondary trend: in the current environment, Australians are feeling anxious and less secure – yet continue to have the most optimistic outlook, while New Zealanders view the cost-of-living crisis and resulting financial related stresses, as their main concern.

The broad spectrum of emotions from optimism to cautious is influenced by different age demographics with the younger demographic <35 skewing towards optimistic and the older >35 more cautious.

Fagerlund explained: “Across Australia and New Zealand people are most concerned about issues closer to home, and in particular their mental health, which highlights the personal impact of the economy, and how it is threatening our traditional sunny cultural outlook on life. 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.”

About Mediahub:

Mediahub is a full-service media agency with a challenger mindset, helping brands embrace the business opportunities offered by accelerating technological, demographic, societal and cultural change.

We offer brands the scale they need to grow along with all the benefits of a fast, agile and flexible agency experience. Scout is our proprietary intelligence platform developed to understand the why under the what of consumers and audiences.

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