How are consumer habits changing and what does it mean for your business?

The behaviours of consumers are constantly evolving. 

And businesses must evolve alongside them to remain relevant and appealing to buyers. The past few years have seen more changes than most, especially following the pandemic. 

We’ve seen the rise of apps and AI, social media, online shopping and consumer’s interest in ethical shopping.

We’ll cover some of the key behaviour changes and how to leverage or update your business to suit them.

The cost-of-living challenge

A big challenge is the rising cost of living – consumers are less willing to part with their dollars as their day-to-day life becomes more expensive.   

ANZ-Roy Morgan Consumer Confidence reports showed consumer confidence plunged to an ‘extremely low level’ in May 2023. Meanwhile, the number of people who believe it’s a good time to buy a major household item has fallen to the lowest level since the start of the pandemic.

Almost 90% of New Zealanders are becoming more mindful about where they choose to spend their hard-earned dollars, according to Consumer NZ research.

Business owners may need to review their costs and see if they can cut them or find alternative production solutions, whether it’s automation or other technology updates.  

It’s also important to show the value of your products and appeal to tighter wallets. Are your prices competitive? Or perhaps your relationships are what set you apart.

Your unique selling points are more important than ever.

Find new and novel ways to engage customers, show your value and stand out.

“It’s also important to show the value of your products and appeal to tighter wallets”

Kiwis want to make green purchases 

Despite being more cost-conscious, Kiwis are still trying to be green.

Nearly 85% of New Zealanders expect to maintain or increase their focus on making environmentally sustainable food and grocery choices this year, according to Consumer NZ, which says this year's severe weather events are behind this surge.

While New Zealanders are keen to make environmentally sustainable purchases, they worry about how they are going to do it with the rising cost of living.

If you’re a green business, you’re well-positioned to promote yourself in an eco-friendly light. If you’re not, you may want to look at making your product or services more environmentally friendly.

Efficient products can also help to save on the cost of energy and recyclable items can have lower disposal costs.

Digital versus instore shopping

E-commerce was growing before the pandemic and has shot up since.

There are now 4.99 million internet users in New Zealand, with internet penetration at 95.9%. There is a total of 6.54 million cellular mobile connections.

But after years of growth in online sales, parcel volumes slumped back to 2019 levels, with consumers spending less per transaction online than previously. In 2021 New Zealand’s online spending peaked at $7.67 billion but slowed to $6.07 billion in 2022, according to NZ Post.

Much of this can be attributed to the rising cost of living with consumers cutting their discretionary spending – a key area for digital sales.

But the post-pandemic return of bricks and mortar stores may play a role too.

While businesses need a strong digital presence now, it’s even better to have an online site and an in-person service.

The rise of apps

Apps are increasingly becoming a more popular shopping ground, according to Statistica.

Facebook, Instagram, YouTube, and TikTok are all popular platforms for ads that can trigger a shopping spree. So, it’s important for businesses to make the customer’s mobile user experience a good one. The less clicks between finding a product or service and purchasing, the better.

While you can do your own marketing if you’re social media savvy, it can also be worth bringing in an expert to help raise your profile.

How should your business adapt to changing consumer behaviour?

With customers being more careful with spending, it’s important to communicate with your customers to better understand and meet their needs. Whether it’s surveys, in-person chats or market research – make sure you understand what your customer is after.

Understand the pain points, needs and priorities of your consumer and make sure that’s what you focus on.

Important - Steadfast NZ Limited, its related companies and associatesThis article provides information rather than financial advice. The content of this article, including any information contained in it, has been prepared without taking into account your objectives, financial situation or needs. You should consider the appropriateness of the information, taking these matters into account and seek appropriate financial advice before you act on any information.