The last few years have seen Australians face an onslaught of successive macro-level events, which have impacted so many facets of daily life. From the pandemic to the cost of living crisis, Australians are now prioritising health more while being more discriminating in how and where they spend their hard-earned dollars, writes Shaun Broughton, Managing Director APAC at Shopify.

In the wake of so much change, it is vital for businesses to double down on understanding their core customers and considering if changes to their product mix, pricing strategy, or go-to-market approach are needed. Here are some takeaways to keep in mind in today’s shifting retail landscape.

Get to know your customers

According to the Shopify Australian Retail Report, 93 per cent of Australians’ priorities have changed over the past three years. And while some broad trends apply to all consumers, like 63 per cent of consumers now citing health as their top priority, there are also key divergences in attitudes and behaviour.

To delve into this further, we uncovered six key behavioural categories representing different consumer groups in Australia. These include:

• The Value Valuer: defines value as ‘quality that lasts’, and prioritises product quality over brand. This customer is least likely to be influenced by a celebrity or social media, this is the largest group, representing 32 per cent of all consumers surveyed.
• The Loyal Local: also values quality over brand and price, and are likely to switch brands to support local or more sustainable businesses. The most likely to switch to public transport to save money, this is the second largest group, representing 24 per cent of Australians.
• The Savings Seeker: the most stressed consumers overall, and are the most price-sensitive of all groupings. By far the most likely customer to switch to private label brands, this persona represents some 22 per cent of consumers.
• The Mindful Moneybags: the wealthiest and most environmentally conscious cohort, these shoppers have not felt enough of an impact to change their shopping habits and are up 10 per cent of Australian consumers
• The Picky Purchaser: the second highest-earning shoppers, this cohort has the highest expectations when it comes to the shopping experience. They are the most brand-loyal customer by a considerable margin, and comprise 8 per cent of Australians
• The Social Shopper: the most likely to shop online and the most influenced by influencers. This cohort is named after its members’ penchant for digital interaction. They prioritise speed in the purchase experience, but are the least demanding customer overall and make up just 3 per cent of consumers.

Ultimately, with Australian shopping habits shifting and diverging, businesses looking to adapt to the new retail environment need to reassess who their target audience is in order to accurately tailor their business strategies and extract the highest return on investment.

Understand how spending priorities are shifting

Alongside considering who your audience is, it is important to understand their financial stressors and how this is impacting their spending priorities.

According to our research, three-fourths (75 per cent) of Australians said they had opted to cut back on spending to save money. When exploring what consumers are most stressed about, 40 per cent cited the cost of groceries and essentials, with Savings Seekers (54 per cent) and Mindful Moneybags (25 per cent) the most and least stressed about these items, respectively. Surprisingly, only 22 per cent of Australians were stressed about higher mortgage or rental payments, with Value Valuers (24 per cent) and Social Shoppers (18 per cent) bookending the group.

As consumer spending falls, some product categories are more likely to be impacted than others, with 39% of consumers putting an end to jewellery purchases in the past 12 months, a trend seen most among Savings Seekers. Comparatively, 37 per cent of consumers have stopped dining out to save money, 36 per cent have cut back on furniture and household items and 35 per cent have stopped holidaying overseas. Just 12 per cent have cut back on groceries and food for the home, a behaviour most likely to be seen among Picky Purchasers.

But while many Australians are being more mindful of what they spend their money on, our research shows that they are still relatively optimistic about financial prospects, with 37 per cent of consumers saying they are optimistic about the economy and their personal situation, compared to 25 per cent who felt pessimistic.

When it comes to discretionary spending, over half (52 per cent) of consumers said they were still spending money on discretionary items, and a full third (33 per cent) indicated they spend about the same amount on discretionary items as they did in 2022. This means that retailers still have opportunities to capture customers’ wallet share — but only if they decipher what types of people are likely to spend on their products and integrate that into their product mix and positioning.

Optimise omnichannel experiences for your customer

While a decade or two ago shopping in-store was the most prevalent way people purchased products, social media, online and other forms now all have an important role to play in the customer journey. In fact, according to our research, only 38 per cent of Australians preferred shopping-store, with 31 per cent preferring online and 31 per cent on the fence. The Savings Seekers cohort (48 per cent) were the most likely to prefer in-store shopping, whilst 52 per cent of Social Shoppers preferred shopping online.

With no consensus, or even a strong favourite, retailers that don’t offer consumers a seamless omnichannel experience are missing out on market share. That is why it’s important to invest in both the online and offline shopping journeys for a consistent experience, and deliver on the factors in each of these channels that customers most value.

For example, the number one expectation Australians have when shopping online, is that retailers accept debit & credit cards. Simplifying the checkout experience by offering a variety of checkout options can help retailers convert more online shoppers to customers.

On the other hand, when shopping in-store, consumers said they valued knowledgeable staff (57 per cent), enough stock of the item they want (56 per cent), and attentive service (49 per cent). An omnichannel platform that can help retailers manage both customer data and inventory will go a long way in supporting these customer expectations. A small minority of customers, mainly Picky Purchasers, said their number one expectation was an in-store perk like a cafe or smoothie station, so it seems they have been named accurately.

Brand loyalty isn’t dead

Brand loyalty isn’t dead, at least not entirely. While there are more ways to shop than ever and countless brands competing for consumer attention, more than a third (36 per cent) of Australian respondents to our research said they have favourite brands they always shop from, including close to half (46 per cent) of Millennials, who are overrepresented among Mindful Moneybags and Picky Purchaser groups.

But that doesn’t mean that others won’t jump to another brand if the price is right. Australians typically spurned their usual brands due to finding a better price or discount (49 per cent), except Mindful Moneybags whose main reason to shop elsewhere was convenience.

To win loyalty from consumers, businesses need to understand what factors are likely to win their target consumers over. As per our research, over half of Australians (53 per cent) gravitated towards consistently low prices and promotions, followed by offering high-quality goods (50 per cent). Loyalty points (48 per cent) rounded out the top three, with Value Valuer and Savings Seeker consumers more likely to be won over by loyalty program rewards.

Ultimately, Australian consumers have faced a whirlwind of change these past few years. And with a turbulent next twelve months on the horizon, it is important for businesses to be agile, reevaluating their audiences and considering how best to appeal to their needs, in order to thrive in today’s retail reality.

Want more? Get our newsletter delivered straight to your inbox! Follow Kochie’s Business Builders on Facebook, Twitter, Instagram, and LinkedIn.

Now read this

Sealing the deal: How to maximise conversions in a tight economy