Retail brand survey shows nearly half of consumers are switching to cheaper brands

Appeared in Stuff 17 June 2023

Antony Young is co-founder of The Media Lab.

OPINION: Last month, global advertising firm Dentsu released a consumer survey of retail spending behaviours in Australia. It provides a stark picture of how the cost of living crisis is altering consumer purchasing habits.

According to the survey, 46% of Australians are switching to cheaper brands. When economies are strong, consumers are more willing to pay a premium, but right now value for money is front of mind. Anticipate brand switching across the board from power companies to peanut butter.

When it comes to food, 60% are cooking more meals at home. 54% are dining out less frequently and 47% are cutting back on food delivery.

Nearly 29% of homes are cancelling their entertainment subscription services, such as Netflix, Disney+ or pay TV. The report noted that Australians cancelled 1.3 million steaming accounts in the last quarter of 2022.

Disruptions in the supply chain are having a knock-on effect to retailers. The survey found 65% of shoppers experienced stockouts. As a result, 40% of them are going to a different retailer.

While we have seen an upward shift to online shopping, consumer concerns are affecting e-commerce businesses. The cost of delivery was cited by 35% of consumers as the main barrier to purchasing products online.

What’s clear is that your marketing dollars are going to be even more precious now.

To deliver growth or even sustain revenues, brands and businesses will need to focus on gaining market share. Cutting back your advertising just makes that job so much tougher.

It might mean promoting deals to get people in through the turnstiles, but brands also need to make a greater effort to promote product understanding and reliability, so that consumers can better make the value for money calculation in their favour.

Samsung Galaxy has done a great job promoting its superior camera technology and longer lasting batteries. So far this year it has outsold the Apple iPhone and was the only brand among the top three mobile phone manufacturers to have grown over the previous quarter in a market that shrank 12% overall (global sales).

The time is ripe for young brands or “value brands” to step up and promote.

Hyundai-Kia during the 2008/9 recession was able to leapfrog both Honda and Ford to be the fourth-largest car manufacturer on the back of a big brand push that promoted its well-designed, yet affordable vehicles.

Leaning into this trend, former NZ Masterchef judge Simon Gault launched a range of spice flavour shots to give home cooks restaurant-styled seasoning to their dishes.

Finally, if people are watching less Netflix and Disney+, it means they’re likely watching more YouTube, TVNZ+ and ThreeNOW which are ideal places to place your ads. Right now, video advertising has never looked better for advertisers.

Antony Young is a co-founder of The Media Lab, Wellington’s largest independent media agency.  He spent twenty years heading media and digital agencies in New York, London and Asia, before returning back to New Zealand. 

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