Mediahub has published a new retail consumer trends study, 'The New Value Economy', revealing high rates of brand switching across all income levels in Australia and New Zealand.

The study suggests that the typical retail journey is lengthening due to a worsening cost-of-living crisis, with consumers spending more time in exploration and evaluation modes to seek out 'value for money' and better deals.

Three in five people in Australia and New Zealand are switching to cheaper products or choosing to delay purchases altogether. This shift in consumer behaviour is challenging brands to adapt quickly. Brands and marketers need to capitalise on new potential growth from customers seeking better value offers and defend from competitors for existing customers who are in a high 'switch' mindset.

"Understanding consumer behaviour and discretionary spend across retail categories, across income levels and consumer life stage segments is imperative for brand survival in the face of a worsening economic downturn," said Chief Strategy Officer at Mediahub ANZ, Linda Fagerlund. "That’s why we’ve undertaken this study; to provide a deeper understanding of ANZ’s current retail landscape and the social, economic and cultural dynamics at play affecting consumers, and how brands and marketers need to adjust to drive growth."

'Value for money' is driving purchase decisions with 53% of Australians and 54% of New Zealanders saying this is the most important factor when choosing a brand or product. Grocery spending is in decline or experiencing a plateau across all consumer segments. In Australia, 58% of higher income earners, and 56% of low-income earners delayed purchase of a product due to cost of living pressures. In New Zealand, 75% of high-income earners and 43% of low-income earners delayed purchase, and 51% of high-income earners vs 40% of low-income earners skipped a product purchase.

"For brands, this pattern presents a double-edged sword and requires greater flexibility in developing marketing strategies. On the one hand, brands need to capitalise on new potential growth from customers seeking better value offers, but also need to defend from competitors for existing customers who are in a high “switch” mindset," Fagerlund said.

The study also found that 68% of both Australians and New Zealanders voted cost-of-living or economic turbulence as their primary concern. Australians are feeling anxious and less secure, yet continue to have the most optimistic outlook, while New Zealanders view the cost-of-living crisis and resulting financial stresses as their main concern.

"Across Australia and New Zealand people are most concerned about issues closer to home, and in particular their mental health, which highlights the personal impact of the economy, and how it is threatening our traditional sunny cultural outlook on life. Brands need to apply empathy and not shy away from the realities of the cost-of-living crisis and the anxious age we are living in, when planning how best to connect with their audiences, regardless of income," said Fagerlund.