In the current economic landscape, SMEs must closely monitor consumer spending habits to anticipate market shifts and align their business strategies accordingly.
According to Tracksuit’s data analysing consumer behaviour changes over the past three months, Australians are tightening their belts and reducing expenditures in several key areas.
The data reveals interesting insights into the spending habits of Australians over the past three months, particularly in response to increasing costs. Among the various categories, groceries, eating out, and clothing are the top areas where Australians are cutting back on their expenses.
Notably, a significant percentage of Australians, 65 per cent, have reduced their spending on groceries. This trend is particularly prominent among the younger demographic aged 18-34, who are the most likely to cut back in all three categories: groceries, eating out, and clothing.
Regarding the reduction in grocery spending, consumers are employing different strategies. Approximately half of those cutting back on groceries have opted for cheaper alternatives. Additionally, 47 per cent have decreased the amount they buy.
Regionally, consumers in Queensland have shown the highest inclination to cut back on groceries, with 68 per cent of respondents from this region indicating a reduction in their grocery spending. In Victoria, 66 per cent of consumers have also curtailed their grocery expenses, followed closely by those in New South Wales and the Australian Capital Territory, where 63 per cent have made similar adjustments.
Apart from groceries, the study highlights that increasing costs have also adversely affected travel and healthcare. Among respondents, 42 per cent have reduced their travel expenditure, while 36 per cent have made cutbacks in healthcare spending. Once again, the younger age group of 18-34 shows the highest likelihood of cutting back in these areas.
Interestingly, more than a quarter (26 per cent) of those reducing their travel spend have completely halted their travel expenses. Furthermore, when it comes to healthcare, around 3 in 10 consumers are opting for cheaper healthcare options as a means of cost reduction.
Changing buying behaviour
In April 2023, Monash University’s Australian Consumer and Retail Studies Pulse Survey provided valuable insights into the changing habits of Australian consumers, indicating that their adjustments extend beyond spending amounts.
The survey aimed to gauge consumer sentiment regarding the cost of living and track changes in purchasing behavior compared to the previous year. Dr. Eloise Zoppos, the lead author of the report and Research & Engagement Director of the ACRS research unit at Monash Business School’s Department of Marketing, highlighted that Australian shoppers are increasingly mindful of their buying decisions. The survey revealed that 35 per cent of respondents are actively seeking locally produced products, a significant increase compared to the same period last year. Additionally, 30 per cent of consumers reported shopping more for environmentally friendly products.
Dr. Zoppos expressed her optimism regarding the growing interest in locally made products, especially following “Australian Made Week.” This trend has been observed over the years and gained significant momentum during the pandemic as consumers became more conscious of their overall shopping habits.
Regarding apparel, including clothing, footwear, and accessories, Australian shoppers demonstrated mixed behavior, with 27 per cent indicating increased spending and 29 per cent reporting decreased spending compared to the previous year. The survey indicated that sustainability remains a significant factor influencing consumer choices, with Australians rejecting a throwaway culture and becoming more mindful of their purchases.
The survey also revealed that many Australians are now more price-driven in their retail habits compared to the same time last year. Almost half of the respondents (47 per cent) stated that they now prefer lower-priced brands, indicating a reconsideration of their traditional spending patterns.
Dr. Zoppos emphasized that the rising cost of living is a primary concern for Australians, driving their increased mindfulness and price-consciousness. The research suggests that consumers are actively seeking lower-priced brands or alternatives, waiting for sales, or even postponing purchases indefinitely.