Australia’s sentiment around economic recovery has changed as the price of living continues to grow and consumers become more hesitant around spending, according to new McKinsey research.
The research, on Australian consumer sentiment during the coronavirus crisis highlighted consumer trends and concerns.
In Australia, optimism about economic recovery has declined since the November 2020 pulse survey but remains higher than at the onset of the Covid-19 pandemic, McKinsey reports.
Six in 10 consumers predict routines will return to normal only after June 2022; two-thirds do not plan to splurge in 2022, according to McKinsey research. Although Australian households increased their spending in the past month, net intent to spend remains negative.
According to the research authors, “Digital and omnichannel adoption continue in most categories, and intent to use out-of-home services rose. Seventy-five percent of consumers have addressed the rise of omicron by changing how they engage in out-of-home activities. Most consumers have tried a different brand or retailer, especially to switch brands in pursuit of value.”
In March 2022, five consumer themes emerged according to McKinsey: declining optimism, omnichannel is the ascendant, partial recovery of out-of-home spending, a tentative return to out-of-home activities and loyalty shake-up.
According to McKinsey, overall optimism fell 10 percent in 2022 versus in 2022, driven by older consumers.
Most expect normalcy to return to routines only after June 2022, nearly two-thirds do not plan to splurge or treat themselves this year according to the data.
Omnichannel is ascendant
Trials of alternatives to in-store shopping continues to rise and between 70 to 80 percent of consumers intend to continue their usage. There is a growing intent to continue using out-of-home services such as online fitness and telemedicine, McKinsey predicts.
Partial recovery of out-of-home spend
The net intent to spend is negative across most categories with the exceptions being groceries and certain discretionary and out-of-home categories according to McKinsey. Most changes in net intent are price related.
A tentative return to out-of-home activities
According to McKinsey, 49 percent of consumers say they are engaging in “normal” out-of-home activities. From these, 75 percent said they have changed the way they engage because of the omicron variant.
Most consumers have tested a new brand or retailer and according to McKinsey, have indicated a higher intent to continue.
Switching products or brands are more common than changing retailers as consumers switch to seek value, especially as rising costs aren’t faltering anytime soon.