A new consumer mindset of ‘purposeful spending’ is expected to change the way people spend their money. Consumers are holding their hard-earned dollars close coming into the new year and this trend is here to stay.
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.
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,” he explains.
“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.
“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.”
Hart identifies six pieces of advice for retailers going into 2023.
1. Stay close to your consumer. Understand what they are thinking and feeling―80 per cent 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 say they go without, so their children don’t have to, which is emotional territory for families.
