Baby Boomers are more likely than their activist children to buy sustainable goods and services as younger Aussies tighten their purse strings, new research by M&C Saatchi has found.
Lead image: Gen Z shoppers are having to make some tough decisions about the products they love.
Younger consumers wracked with debt and anxiety plan to cut their spend on non-essential goods and services, M&C Saatchi’s third Cost of Living Crisis report has revealed.
The study, which polled about 1,500 consumers across different generations, found a notable rise in consumers financial anxiety, uncertainty and caution then similar studies in 2022 and 2033.
After 13 interest rate hikes in two years, the spending sentiment of Aussies has plummeted, with a sharper focus on essentials instead of luxury goods, with women saying they are feeling the pinch and negative emotions more sharply than men.
M&C Saatchi Group head of CX Melinda Lofts told B&T that although younger generations are feeling the squeeze more acutely, it is being felt across all demographics.
“Everyone’s tired and everyone feels like they aren’t anywhere ahead after two years. There is financial fatigue and no end in sight, which has triggered that negative sentiment,” she said.
“People have had to adapt their shopping habits and become more savvy over time. So that intentional shopper has shifted their mindset. Originally people were after financial hardship relief and after payment solutions, but now they are focused more on customer service.”
Older generations have higher levels of calmness and security then younger generations, who are concerned about their financial situation and make ends meet (see charts below).
The cost of living crisis – fuelled by soaring interest rates, the War in Ukraine, inflation and concerns about price gouging – is forcing Aussies to rethink spending habits.
Many are planning to spend more on groceries, utilities, housing costs, petrol and insurance fees, while making cuts to eating out, fashion, cosmetics, alcohol and travel.
The increases in spending on what consumers ‘need’ versus what they ‘want’, as well as raging headlines about price gouging from supermarkets, fuel and energy companies, may deliver a short-term shot in the arm to companies, but is also contributing towards a negative perception of these brands.
When reality hits
One of the more surprising findings of the research is a notable shift in young people planning to cut their spending on sustainable products, particularly in the wake of Gen Z activism around climate change and values-driven brands.
Nearly two-thirds (65 per cent) of consumers aged 18-24 said they plan to buy less sustainable products compared with 48 per cent of Boomers and 55% of Gen X (those aged 40 and above).
Women (62 per cent) are more likely to buy unsustainable products than men (53 per cent)
“Young people that have grown up having conversations around sustainability, led by Greta Thunberg and other young activists, this is the first time their values have actually been challenged by economic conditions,” Lofts said.
“There is a gap between intention and action. They might want to do the right thing but if they’re down to their last $20, they have a tough choice to make, and it’s putting their values to the test.
“What the research shows is that older generations do care about the environment and have the luxury of buying into sustainability because they don’t have the same financial pressures as younger generations. For brands, it’s about balancing messages around sustainability with discounting.”
A Brand loyalty bonfire
Another finding that should pique the interest of marketers is that seven in ten consumers are willing to be less loyal to brands in favour of surviving the cost of living crisis. This is being led by 50-59 year-olds (with 80 per cent not bothered by brand loyalty) while nearly two-thirds of Zoomers say they will not be loyal to brands they like.
Nearly all consumers (85 per cent) are open to trying new brands and retailers, 89 per cent are making products last longer, 80 per cent are hunting for deals and 68 per cent are visiting multiple shops.
Some consumers are using hacks to fool family and friends into thinking they are using certain brands, whether it is squeezing tubs of Aldi tomato sauce into Heinz bottles, or refilling Aesop hand soap bottles with cheaper alternatives (see below) – a practice known as ‘duping’ that B&T does not endorse.
@chandlerisaac The best #aesop refill #dupe 🙌🏼 send this to your fancy friend! It’s got the perfect smell and the perfect feel – well done, @Element Brooklyn 👌🏼 #homedecor #bathroom #lifehack #budget #learnontiktok #diyprojects ♬ Sunny Day – Ted Fresco
Aussie brands are also copping a battering, with about half of consumers planning to ditch homegrown products for cheaper foreign imports. Boomers are more loyal to the ‘Made in ‘Straya’ label, with only four in ten planning to buy foreign.
It’s about value, not just price
Consumers want brands to provide better bang for their bucks, and this value can come in several forms.
The most common ‘value’ customers want are increased discounts (cited by 69 per cent), which is a 9 percentage-point increase from the 2023 study.
More loyalty programs was another increasingly important way brands can show customers value, up 5 percentage points from the previous study, and better customer service was up 6 percentage points on the last study. Flexible payment options are less sought after than in previous years.
Anthony Albanese’s tax cuts are unlikely to fuel huge increases in spending; lower income earners say they will allocate more towards everyday expenses, and older respondents plan to put it towards savings and mortgage repayments.
So what should brands do in the current climate?
M&C Saatchi’s Lofts encourages advertisers need to think more creatively about ways to show customers value.
“If you look at ads at the moment, it’s a wallpaper of value, giant discounts and red savings,” she said.
“When there is this much clutter of messaging, brands need to consider creative ways of differentiating value, whether it is through the gamification of value, better customer service or loyalty and rewards programs. We’ve seen that people are willing to sacrifice on brand loyalty. It’s about combining the rational and emotional messaging to get customers to justify spending that extra bit more.”
Download: M&C Saatchi’s Cost of Living Report
