Micro-spending is down, strategic spending is up and consumers are shopping around to get a better deal, Sara Tweedly, Canstar CMO, revealed on stage at AdNews Brisbane L!VE.
This is due to the rising costs-of-living where weekly expenses for an average household of four has gone up $250 per week, according to Canstar's cost of living comparison index.
And for those mortgage holders who fixed their home loan three years ago, they will now be paying $1100 more to cover monthly repayments and even if someone locked in only one year ago, they will be paying more than $500 extra per month.
“As you might expect, consumer sentiment is pretty mixed,” Tweedly said.
There's two types of consumers now - two thirds of the population are struggling with increases to interest rates and inflation. And the other third has probably just come back from an overseas trip.
As a result of increasing expenses, particularly in New South Wales where mortgage repayments alone can be up to 50% of a household’s income, other expenses are put under pressure.
Households are forced to take from their savings which have built up during the pandemic, with 20% of people dipping into savings, over 30% saving less, and consumer monthly savings dropping by about 40% in the last 12 months.
“But the good news is that consumers are actually feeling and doing okay surprisingly,” Tweedly said.
“Despite all that's going on 64% are telling us they're managing and it's easy to see why because consumers are actually taking action.”
50% of consumers are pulling back on leisure items like takeaways, cafe coffees and streaming services. They're also taking advantage of coupons, deals, bulk buying and switching providers trying to mitigate the costs themselves.
“In our surveys, we're seeing 28% of consumers have switched in the last 12 months and a further 33% are telling us that they are looking to switch in the next 12 months,” Tweedly said.
“Particularly with lower commitment products where it's perceived easier to switch - the likes of energy products, insurance, car, home, mobile and gas that’s where we are seeing consumers starting to take action.”
But the spending that is happening is strategic.
“Consumers are spending on things which in the longer term will help them financially to prepare to consume such as solar power,” Tweedly said.
“People are also taking longer to make a decision, they're spending more time on the site and researching more because being more considered affects the pocket less.
And the biggest purchase for Australians right now is a holiday.
“We've seen travel increase by 10% compared to pre-COVID levels,” Tweedly said.
“But interestingly budget conscious destinations are the most in-demand, consumers are looking for something that gives them extra value.”
AdNews would like to thank supporting partners Foxtel Media, RyvalMedia, Quantcast, News Corp Australia, associate partner MIQ and co-curators Brisbane Advertising Association and Brisbane Advertising and Design Club.
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