As we move into 2023, inflation, rising interest rates and cost of living are at the forefront of people’s minds. Consumer confidence is low and we’re expecting significant belt-tightening for the holiday period and into the next 12 months. According to Pureprofile’s 2022 Christmas Report, more than half (58%) of Australians will be buying fewer gifts this year to keep their budgets in check, with financial strain the biggest stress affecting people.
As with the early days of the pandemic, it’s difficult to know just how next year will unfold, or how consumers will react to external pressures. When there are so many unknowns, it’s critical for businesses to consistently keep in touch with consumers through market research. Here’s what we believe awaits the market research industry in 2023.
1. Retail will need to emphasise value for money and seamless omnichannel experiences
The Australian Ecommerce Report 2022, conducted in partnership with IAB Australia, reported that value for money was identified as the most compelling feature for online brand purchases for 84% of respondents. Fast shipping declined as a driver of purchases and consumers placed priority on seamless omnichannel shopping experiences.
Two-thirds of online shoppers said cost of living pressures meant they had less to spend on less essential retail shopping this year, while interest rate rises made 65% more cautious about spending, particularly young families. Those currently experiencing cost of living pressures are more attracted to online shopping for price comparisons and finding specific products. They are more likely to be looking for value in programs such as store loyalty cards.
In light of these findings, research will play a critical role in order to ascertain what consumers deem to be value for money in a constantly changing landscape, and for retailers to understand how they optimise shoppers’ omnichannel experiences and bolster confidence among hesitant shoppers.
2. Data protection will be a priority for consumers
The recent Medibank and Optus data breaches have put privacy concerns back in the spotlight, and consumers are starting to vote with their feet, abandoning brands they feel have let them down.
The Ecommerce report found that 55% of online shoppers are “somewhat” or “very concerned” about the use of shopper data provided via their transactions.
A further 11% of online shoppers say their level of concern depends on how much they trust the retailers with which they are sharing their data. Most online shoppers do understand that their data is used for targeting advertising and marketing, however, 24% don’t know whether retailers share their data with other companies. Businesses will need to spend time educating consumers about data uses in the coming year, and adopt a more open approach to communication about their own practices.
3. Brands will need to pull from new data sources to stay competitive
Last year, we predicted that industries such as tourism, hospitality, recruitment and HR would see the most significant growth. This proved to be the case, with inbound tour operators, travel agencies and airlines topping the growth charts, and job ads reaching record highsearly in the year. In 2023, we see several other industries as likely to thrive:
- Education will see an upturn, with more overseas students looking to return to Australia.
- The insurance sector will also benefit from the ongoing volatile times. People will be looking to insurance to cover their uncertainty.
- Banking and finance will also benefit. As Australia heads towards a potential recession, financial institutions will see an uptick in activity as more consumers turn to them for support.
Appealing to budget conscious consumers will translate into fierce competition across all industries. Brands should prioritise getting to know how they stack up against their competitors, with consumer spending data being particularly important during this period.
4. The evolving definition of the “Australian family” means research insights are more important than ever before
A study conducted with Insights Exchange this year found that one-third of Australians do not relate to the portrayal of family/households by advertisers and media, which typically involves a set of parents with young children living at home and extended family close by. Couples with young children in fact only account for 16% of households. 60% of Australian households have no children at all.
In the next five to 10 years, the traditional household structure will be surpassed by more fluid definitions of family, due to couples having children at a later age and Millennials being unable to afford to buy property. For adult children (18+) still living with their parents, 55% are there to save money while 47% say they cannot afford to live elsewhere.
The “kidult” phenomenon of children not leaving the nest has major implications for the grocery customer journey, buying appliances, planning travel and managing multiple streaming services and devices. It means four (or more) adults living in the same house, potentially sharing expenses will be akin to that of flatmates.
While it’s too soon to say what patterns of spending and sharing dominate these living situations, it will have fundamental impacts on any research conducted as it veers from conventional notions of an Australian household.
2023 will undoubtedly be another challenging year, but opportunity does lie within. For brands and businesses to flourish, they will need to constantly have a finger on the consumer pulse and move nimbly in response to fluctuating economic conditions and consumer expectations.
By Melinda Sheppard, COO – Pureprofile
This article was first published by AdNews