Brand loyalty risks with inflation as consumers look for cheaper brands

By AdNews | 25 May 2022
Credit: Karsten Winegeart

Australians are looking for cheaper alternatives in their weekly grocery shopping as inflation takes hold.

A survey of 1,036 Australian adults aged 18 and over, April 21-26, by advertising technology company The Trade Desk and YouGov shows eight in ten people have already made changes to purchasing habits.

More than two-thirds (68%) are expecting the pressure on households to get worse in the year ahead. 44% reported they will be actively looking to buy from cheaper brands or stores whenever possible.

“The rising cost of living is clearly impacting Australian households. There is a real risk to brand loyalty as consumers worry about managing household budgets amidst increasing expenses,” said James Bayes, General Manager, The Trade Desk Australia and New Zealand.

It's not only families changing spending habits. Gen Xers (87%) and Millennials (85%) have changed purchasing habits due to the  increasing cost of living pressures.

And three quarters (75%) of Australians believe wage growth will stagnate with limited growth expected in the coming year.

“From an advertising perspective, we know brands are going to have to be very thoughtful about reaching consumers," says Bayes.

"Brands who may not necessarily want to pass the increased costs to consumers may experience thinner margins during this time.

"As a result, this inflation situation has put a lot more pressure on brands to be deliberate and to make every media dollar work as hard as possible. Budgets will remain stretched and prioritising media that is measurable and comparable is key.

“Throughout the uncertainties of the global pandemic, marketers have learnt the importance of precision, measurement, and agility. Brands are embracing programmatic advertising as it allows marketers to be flexible and agile in uncertain times. With programmatic advertising, they can launch and pause campaigns in real-time, adjust the scale of spend and changeover creative on the fly." 

Bayes says it's crucial that messaging used to communicate with consumers consider market conditions. 

The research also noted that of the those who have switched to cheaper brands or stores, two thirds (66%) are making less purchases in general, half are only purchasing when items are on sale, 41% are buying in bulk, and 50% are putting discretionary purchases, such as holiday-related items, on hold.

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