The way people interact with retail brands continues to evolve.
In 2023, we saw successful brands and retailers transition to a new age of customer experience amid soaring inflation, interest rates and the fast rising cost-of-living. The value of ‘value’ is still ever present for Australians, now in the face of disinflation as our economy keeps growing albeit at a slower pace.
What does value mean?
Value means more than just low price to all consumers who seek quality. When adopting a value mindset, our research reveals that all Australians prioritise ‘quality of products that are consistently good’. It’s a reminder that just talking about price is a risk, particularly with shoppers trading down. This also signals a warning about moving too much to ‘everyday low pricing’ strategies because right now, access to promotions and special offers is rated as more important than price consistency.
For retailers and brands, 2024 will bring an imperative to take a more granular view to
unlock category and brand specific drivers of what represents good value – detail readily available through Circana’s Shopper Survey and Segmentation products.
‘Funflation’ spending
Value is found at the opposite end of the spectrum in ‘funflation’ spending, a term used to explain some surprises in consumer spending, especially the post-pandemic boom in expensive experiences like live entertainment and realising pent-up travel cravings. However, we take a broader view of the term and caution to not underestimate the extent of the pandemic hangover and its role in Australians seeking ‘joyful distraction’ and escapism.
For example, retail enjoyed a strong September based on higher spend during better weather and the launch of a new iPhone. In other words, Australians are still making the most of it; which begs the question, ‘what is considered discretionary and what isn’t?’.
Winning value supremacy
The battle for value supremacy is the preeminent issue for the retail industry in 2024. Winners will communicate ‘value’ simply and saliently, but what does ‘good value’ mean to Australian shoppers? There are different ways that we perceive good value and understanding these nuances is critical.
For example, Circana panellists rated the importance of good value relative to other factors in their choice of supermarket and found that monetary factors are more important for younger ages. However, the gap in sentiment for promotions, specials, and loyalty card rewards between the under 40s and over 65s was most acute with younger Australians much more reliant on both. For older shoppers, quality themes like ‘Australian-made’ and produce freshness rise in importance.
What’s your strategy?
Disruption will continue in 2024, and in Australia’s ever-more value-based economy, it is critical to be nimble, agile and ready to connect with and continue to support shoppers. Trial AI and other new tech, be social with little luxuries that could influence new innovations, and always place loyalty and consumer need at the heart of everything you do.
Australians continue to be in the driver’s seat, and you need to meet them where they are in the moment with what matters to them – no matter how small. Because from little things, big things grow.
This is an excerpt from the full report by Circana ‘From Little Things, Big Thing Grow’. It was originally published in the May edition of National Liquor news.