Understanding the changing spending habits of Australians has become crucial for SMEs in the current economic landscape. By analysing consumer behaviour, businesses can anticipate market shifts and adjust their strategies accordingly.
Recent data from Tracksuit reveals interesting insights into Australians’ spending habits over the past three months, particularly in response to rising costs. Among various categories, groceries, eating out, and clothing are the primary areas where Australians are cutting back on expenses.
Significantly, 65 per cent of Australians have reduced their spending on groceries, with the trend, particularly prominent among the younger demographic aged 18-34. These individuals are most likely to cut back on groceries, eating out and clothing.
When it comes to reducing grocery spending, consumers are adopting different strategies. Roughly half of those cutting back have opted for cheaper alternatives, while 47 per cent have decreased the quantity they purchase.
Regionally, Queensland has shown the highest inclination to cut back on groceries, with 68 per cent of respondents from this region indicating a reduction in spending. Victoria follows closely with 66 per cent, and New South Wales and the Australian Capital Territory with 63 per cent.
Apart from groceries, increasing costs have also impacted travel and healthcare. Forty-two per cent of respondents have reduced their travel expenditures, and 36 per cent have made cutbacks in healthcare spending. Once again, the younger age group of 18-34 exhibits the highest likelihood of cutting back in these areas.
Interestingly, 26 per cent of those reducing travel expenses have completely halted their travel plans. Furthermore, approximately 30 per cent of consumers seeking cost reduction in healthcare are opting for cheaper healthcare options.
Changing purchasing behaviour has been observed among Australian consumers, as highlighted by Monash University’s Australian Consumer and Retail Studies Pulse Survey conducted in April 2023. The survey aimed to understand consumer sentiment towards the cost of living and track changes in purchasing behaviour 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, emphasised that Australian shoppers are increasingly mindful of their buying decisions. The survey revealed that 35 per cent of respondents actively seek locally produced products, marking a significant increase compared to the previous year. Additionally, 30 per cent of consumers reported an increased focus on shopping for environmentally friendly products.
Dr. Zoppos expressed optimism regarding the growing interest in locally made products, especially following “Australian Made Week.” This trend has gained momentum over the years and accelerated during the pandemic as consumers became more conscious of their overall shopping habits.
In terms of apparel, including clothing, footwear, and accessories, Australian shoppers demonstrated mixed behaviour. Twenty-seven per cent reported increased spending, while 29 per cent reported 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 have become more price-driven in their retail habits compared to the same period last year. Almost half of the respondents (47 per cent) stated a preference for lower-priced brands, indicating a shift in their traditional spending patterns.
Dr. Zoppos emphasised 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.
Related: Keeping tabs on prices has never been more important