Posted: 21 May. 2020

The long-term change in consumer behaviour

With David Phillips & Jess Mizrahi

Jessica Mizrahi and David Phillips have been driving quantitative research in market to understand the likely shifts in Australian consumer behaviour in response to COVID.

The insights they have shared are based on the first wave of their Australian Retail Consumer Survey of ~1000 Australian shoppers. We hope that these insights inspire conversations about how we build trust and deeper connections with Australian consumers who are clearly undergoing a shift in traditional behaviours and habits.

Economy vs Health - For the first time we’ve been told there’s something more important than the economy. 40% of respondents are concerned for personal health and 65% are concerned for the health of others. But Australia is at a tipping point. Our anxieties are now shifting from our health to the health of economy. 

The three consumers - We are seeing three types of shoppers emerging from the pandemic – the Needing, the Nervous and the Normal. The Needing have been directly hit by economic downturn, looking to the government stimulus funding for financial support. The Nervous are typically older consumers who have cut back on their spending despite many still in currently employment with a higher discretionary income prior to COVID. The Normal are continuing in a status quo based on their behaviours prior to COVID.

Universally frugal - The commonality between all three consumers is that most are more frugal than ever before which has resulted in the $5.4billion decline in retail in the April quarter. Spending decline has been rapid and severe with a 17pp fall in spending in one week. Driven by fear, more than ~1/4 of consumers are worried about their ability to make payments. Nervous consumers will continue to keep their wallets closed, and a wind down of stimulus support will impact our Needing consumers.

The millennial consumer - Millennials, who have never seen a recession, represent half of the Australian labour force and one in every three dollars spent. They are now starting to save and reduce their discretionary spend. While the hope is that this change is only temporary and this is but a bad dream, the reality may be far more enduring and may result in a change to long term spending habits.

Future technologies - Ironic that we stopped the world for a moment in time but by doing so, we have brought our future forward. The crisis will bring forward future technologies such as 3D printing and drones and will accelerate digital transformation in areas such as eCommerce and online learning. Similar to the SARS effect, the digital legacy left behind by COVID will be the irreversible digitisation of the retail and economic landscape.

What is likely to stick?  New habits and behaviours being formed now will likely drive a change in the way consumers expect to engage in all aspects of their lives going forward. It is crucial that organisations across all sectors start thinking about the sustained changes in these habits and how they best accelerate the changes to their engagement and delivery models to embrace these changes.

How long for things to go back to normal?  While almost 50% of people think it will take more than 6 months for life to go back to normal, they’re more optimistic about their spending habits: ~50% think how much their household spends and the things that they buy will go back to normal in less than 3 months. 

Now is not the time to only play it safe - Innovating within existing models is no longer enough. As consumers are moving from seeking safety to support, businesses must find new ways to preserve the trusted relationship built with their shopper. Most consumers have turned to online shopping, but most of these experienced difficulty or poor experience in doing so. And the impact of this experience is not equal - one good experience can help cement the trust you’ve built with your customer, whilst one bad experience can set you back significantly more, for years at times. It is critical, now more than ever, to create meaningful, exciting digital experiences that shift the dial with consumer behaviours.

So now what?  The onus on Australian businesses is how to make these new habits, behaviours and expectations stick. Don’t retreat back into the safe and normal, this may just be an opportunity to challenge the status quo and reshape industries and consumer experiences as we know it. Embrace the changed habits to recover and thrive. To bring the future forward, faster.

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Steven Hallam

Steven Hallam

Partner, Consulting

Steve leads the Australian Deloitte Digital practice, is a member of the Australian Consulting Executive team, and leads the firm’s digital, customer and marketing offerings for clients across Australia. Deloitte Digital is a pioneer in the Australian marketplace and has been at the forefront of business innovation and digital transformation for over 15 years. Steve specialises in creating purpose-led organisations, making amazing customer experiences, and transforming the way that organisations work. Steve and his team combine leading creative capabilities with deep industry knowledge, business strategy, technology experience and data-driven insights to help clients to see what’s possible, identify what’s valuable and deliver positive, measurable and enduring outcomes for their businesses.

David Phillips

David Phillips

Partner, Consulting

David brings nearly twenty years of experience across a range of commercial disciplines from a local and global perspective. These disciplines include: organisational strategy, brand (custodianship and communication), general management, insights and innovation. Prior to establishing the Brand, Creative and Media practice at Deloitte, David led strategy and media at one of Australia's most successful agencies. He has an MBA from Melbourne Business School, and has established two successful start-ups in the research and psychometric strategy fields. While David's particular strength has seen him recognised as a leader in marketing strategy for consumer brands, he has also led client and agency teams across the public sector, as well as, education, financial services and the retail industry, distinguishing David as one of the region's leading marketing strategists.

Jessica Mizrahi

Jessica Mizrahi

Associate Director, Deloitte Access Economics

Jessica provides practical policy advice and thought leadership for industry and government clients. She has guided projects in a range of industries, with deep experience in financial services, the digital economy and health. Jessica was a finalist for Deloitte Young Businesswoman of the Year in 2015, and previously taught economics to over 300 students at the University of New South Wales.