With pressures felt from multiple angles, Australian consumers are pivoting around emerging financial challenges to get by. These manoeuvres create green shoots of opportunity that companies can harness to weather the storms ahead.
As you plan and strategise around both the pressure points and pockets of growth that influence consumer sentiment and spending, NIQ has summarised the top trends and strategic insights to help your organisation succeed.
The state of Australian consumers right now is under pressure. The cost-of-living pressures feel like an ongoing squeeze and show minimal signs of easing their grip any time soon. Unemployment rates remain steady, but wages continue to lag behind inflation rates. As factors like global crises (and conflict escalation) rise to consumer consciousness, expect heightened competition for a smaller pie of consumer spending.
Significant external factors, which for the most part are beyond our control, contribute relentlessly to our FMCG industry. The good news for brands and retailers is that although there is an expectation the challenging consumer environment will persist, pockets of growth have emerged as consumers pivot spending behaviours to survive and thrive. So how can manufacturers and retailers best prepare for these inevitable challenges and be equipped and agile to respond?
The consumer divide
NIQ’s 2024 Australia Consumer Outlook Report looks at two core consumer groups: ‘Strugglers’ and ‘Cautious’. Although Strugglers and Cautious are both careful with their spending, there are significant differences in their profiles and strategies to win within these consumers. Being ‘cautious’ is a mentality that stretches across small and large households, families and non-families as well as the highly affluent and less affluent. Personalising your approach to provide value to specific consumer segments is no longer optional.
Unemployment rates remain steady, but wage growth lagged inflation rates over the last couple of years, leading to an erosion of purchasing power. As factors like global crises (and conflict escalation) rise to consumer consciousness, expect heightened competition for more limited consumer spending. The value equation offered by different FMCG products has become increasingly more important for consumers.
Essentials remain strongly positioned among consumers
The FMCG sector remains a resilient stronghold for consumer spending. While consumers expect to cut back spending on categories like dining out and leisure, spending intentions for groceries and household items remain in positive territory. This indicates a more home-centric behaviour, as consumers replace out-of-home occasions with in-home experiences. Our NIQ Full View of the market, including data on Tech & Durables (-2.3 per cent value sales), On-premise channels (20 per cent of consumers visiting less frequently) and in-home consumption for Liquor (3.5 pr cent value growth), revealing a clear preference for value-driven home-based consumptions.
Products offering affordable premiumisation are well positioned within consumers and facing solid growth. This trend is evident across several categories:
- Scotch Fillet: +19.2 per cent value growth. Premium steak cuts are becoming more affordable, offering an alternative for an out-of-home meal.
- Roast and Ground Coffee: +12.5 per cent value growth. High-quality coffee at a cheaper price per cup than capsules.
- Beer/Cider: +9.7 per cent value growth. Consumers are bringing social occasions to their homes and drinking more at home.
Continue to innovate and play online
More than half of Australian households remain online shoppers, with their frequency increasing year-on-year. Online is especially appealing for younger households and families that seek convenience and show no signs of slowing down.
Innovate. Innovate. Innovate. Almost two-thirds (63 per cent) of consumers say they would purchase a product that has innovated to make it as affordable as possible. Supporting bottom line and boosting overall growth during times of volumetric slowdown. Sustained innovation enables companies to break through: Manufacturers growing innovation sales were 1.8 times more likely to grow overall sales.
However, it’s not only about price, but about value equation: positioning yourself as the consumer’s top choice through a unique value proposition can underscore your superiority in the market. Ensure your product range delivers value, alleviating ongoing consumer pressures; fine-tune pricing and promotions accordingly.
In summary
Daily consumer decision-making and spending are rarely done in isolation of broader socio-economic factors. Companies that succeed in capturing demand this year will need the broadest and fullest view of how people earn, think, plan and spend their resources. Enter NIQ. The world’s most complete and clear view into consumer buying behaviour.
About the author: Marco Silva is a customer success director at NIQ.
- Connect with NIQ Australia to understand the evolving Australian consumer and seize emerging opportunities. contact us here.
