After two years of major global crises and social issues being top of mind, Australian consumers have retreated to a ‘closer to home’ mentality, with a particular focus on cost-of-living pressures and housing prices — regardless of the demographic.
That’s according to L.E.K. Consulting’s Australian Consumer Survey of some 1,500 consumers conducted in the second week of May 2023, which seeks to understand the concerns, activity levels and consumption habits of Australians over the prior 12 months as well as their expectations for the future. Topics ranged from macro issues such as broad global concerns, sustainability and flexible work practices to deeper dives into activity levels and consumption habits around travel and leisure; entertainment; food and beverages; and health, wellness and beauty.
Among the survey findings was that as Australian consumers grapple with the ‘new normal’ in areas such as flexible working and both business and leisure travel, the cost of living is by far the dominant concern.
There’s been a return to pre-pandemic levels of activity, and that is expected to be sustained over the coming year, with bright spots for growth in travel and leisure as well as entertainment. Leisure travel is not only returning — it surpassed business travel by a significant margin over the past 12 months — but it has room to grow further, with an increased proportion of survey respondents saying they expect to travel for leisure in the coming year. Indeed, similar to 2022, consumer intention to holiday has increased in the wake of COVID-19, with the most significant increase found in budget travel intentions.
Australian business travellers are, for the most part, already back to travelling but are also planning longer and more frequent trips over the next 12 months. In the meantime, flex work is here to stay, but perhaps not to the degree that everybody expected. Hybrid working arrangements are still more prevalent than they were pre-COVID-19, but less than was expected a year ago. The amount of full-time office work, on the other hand, is significantly higher (46%) than had been expected (11%), perhaps reflecting mandated work practices on the part of both medium and large enterprises.
Penetration of the online channel continues to rise, and messages around sustainability and ethical practices are resonating with consumers as they navigate categories and brands. When it comes to shopping, while consumers are more willing to shop online than ever before, bricks-and-mortar purchasing continues to account for some 70% of sales across multiple product categories. Claimed willingness to pay more for sustainable products is evident, with Australian consumers willing to pay, on average, 20% and in some cases as much as 30% more for products with sustainable credentials. In beauty, the primary drivers behind purchase intent across all demographics are brand trust and ethical behaviour, with younger consumers also swayed by brand aesthetic and identification with brand-appointed influencers. Meanwhile, when it comes to grocery shopping, buying foods in eco-friendly packaging is the most common sustainable behaviour regardless of age.
With COVID-19 now largely in the rearview mirror, most consumers in the country have re-engaged with activities such as eating out, going on holidays or attending a concert — and some 20% of younger consumers are doing so at a level higher than before the pandemic. Indeed, while lower-cost and/or free activities dominate how consumers are spending their leisure time, the majority of survey respondents said they’re expecting to increase the frequency of their engagement in most leisure activities by 5%-15% next year. The desire to be out and about has bounced back, particularly for the young and the wealthy, illustrating the impact of cost-of-living concerns on consumer behaviour.
While post-pandemic consumer behaviour varies depending on individual circumstance, looking after both their physical and mental health appears to be important for many Australians. Mental health is increasingly considered to be as important as physical health, with more than half of consumers actively looking for ways to maintain their mental health in 2023.
To learn more about the plans and priorities of the Australian consumer, be sure to download our analysis.