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Tuesday, May 28, 2024

‘Intentional spending’ changes the retail landscape for 2023

A new consumer mindset of ‘purposeful spending’ is expected to change the way people spend their money going into the holiday season. Consumers are holding their hard-earned dollars close coming into the new year and this new trend is here to stay.

New research by Insight LED – a member of the Assembled Group, found that the current uncertain economic environment has meant consumers are currently more cautious and vigilant about the brands and products they are supporting.

The research which surveyed 800 Australian adults identified the changing picture of consumer spending and found that:

  • Fifty-seven per cent changed their shopping behaviour in the past six months purchasing only what they need,
  • Fifty-five per cent are holding off on plans for holidays and travel with more than half holding off on other purchases such as a car,
  • Personal safety, privacy, sustainability and Australian-made are driving consumer choices, and
  • Eighty per cent of Australians stated they are impacted by cost-of-living pressures- predominantly felt by women.

Assembled Group Chairman Craig Hart says these changes to spending patterns are likely to dictate retail trends for 2023.

“The retail landscape has changed post-Covid. While this might seem daunting to retailers, it is a time for opportunity and adaptability. Intentional spending is on the rise, people are starting to make purposeful decisions that are in line with their financial means and personal values”, Mr Hart said.

“Consumers are feeling the pinch of the rising cost of living, and are no longer spending for the sake of spending, rather their buying decisions are more deliberate. This means consumers will need to be met on a more personal level.”

Mr Hart identified six pieces of advice for retailers going into 2023.

  1.  Stay close to your consumer. Understand what they are thinking and feeling – 80% of Australians have felt an impact on their household spending due to rising cost of living pressure.
  2. It is time to be bold and cut through. In tough financial times when other brands pull back on their advertising, it presents an opportunity for the brave and bold to gain a share of voice and market share.
  3. Continue to brand-build. It’s easy for brands to become short-term focused when faced with tightening economic times. Fifty-seven per cent of consumers are shopping with a purpose in mind more often, and purchasing only what is needed. It is important for brand building to remain on the cards, support your pricing, and make your brand stronger on the other side.
  4. Private label-proof your brands. Private label brands will always grow in tough financial times; brands can respond by building brand equity as the best defence to justify price premiums.
  5. Innovation. Think about how the market has changed to identify new opportunities for innovation. Forty-three per cent of consumers are spending less on food, restaurants, and entertainment, so it is time to look at back operation innovation or products that are helping solve consumer problems.
  6. Use creativity in times of crisis. Advertising testing shows campaigns that perform strongest on engagement are those that can connect with consumers through emotion and attention. Almost one in five consumers said they go without, so their children don’t have to, which is emotional territory for families.

For more information, visit assembled.com.au/news-and-views/assembled-research.

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