JCDecaux New Zealand released its IRIS audience study, revealing consumers are scrutinising FMCG spend as the cost of living rises and household budgets are put under pressure.
How are New Zealanders handling the rising costs?
Victoria Parsons, Senior Strategy and Insights Manager JCDecaux New Zealand said: “‘Our Shopping List Status’ study found that New Zealanders are tightening purse strings, with 91% noticing botched household budgets and 25% reporting that they are actively cutting back.”
Budgetary cuts start on the shopping list
“For New Zealanders noting reduced disposable incomes, grocery shopping is an easy place to make cuts. Shoppers are paying close attention to what goes onto lists and intro trolleys. It is interesting to understand consumer perceptions as to what is a necessity and what is a luxury; we see consumers justifying brand purchases as necessary for personal reasons.”
“Out-of-Home can be a powerful platform to impact and influence in-store and online shoppers throughout the day while they are mentally planning their shopping lists. 83% of respondents agree that brands that advertise on Large Format are quality brands, which is key for consumers to overcome price sensitivity and avoid replacement by home brands.”
Brands deemed an everyday luxury are at risk to spending cuts with research showing:
- 58% of respondents are planning to stop buying everyday luxury items
- 47% of respondents plan to adopt more home brands
- 40% of respondents will only buy trusted brands
- 77% claim price is the main consideration when choosing between similar products.
Little to no-compromise on well advertised goods
Gary Rosewarne, Sales Director JCDecaux New Zealand says, “What consumers deem an everyday luxury is interesting. Respondents told us items like coffee and tea, bread, self-care and dairy are non-negotiable in terms of buying favourite or quality brands, while for canned and frozen goods, and cleaning products, people are shopping the category based on price.”
“Luxury does not mean premium, it means moments where you expect quality FMCG experiences and won’t trade down – you justify the price premium,” Rosewarne said.
“The research concludes that as inflationary pressures increase – due to growing interest rates and higher prices on most things we consume – brands should be focusing on protecting purchase intent and quality perceptions. Brands can get ahead of changes to consumer spending by communicating product benefits through Out-of-Home advertising, giving consumers confidence to continue buying quality brands,” Rosewarne further said.
The study also reveals that the emotion or promise of brands can overcome price sensitivity. Consumers seek validation to define which brands remain as necessities on shopping lists. Brands without meaningful quality cues may be swapped out for cheaper alternatives.
The traditional notion of the household shopper no longer applies. Nearly all New Zealanders are household shoppers, whether all the time or occasionally. Women form the majority of main shoppers, while men have increasing influence, with 43% identifying as main shoppers.
What were the insights of the study?
Key insights for New Zealand marketers include:
- Kiwis are planning budget changes: everyday luxury brands without strong emotional reasons are most at risk. Marketers should communicate their product’s benefits, particularly taste and quality, to give consumers confidence to continue buying them.
- People tend to list products, not brands on shopping lists: Certain brands have mental availability – it doesn’t mean someone is shopping the entire category, it means considering the 2 – 3 brands people buy and potentially comparing these with specials.
- People are thinking about upcoming meals while they are driving. Large Format Out-of-Home impacts audiences on obligatory journeys, when making mental shopping lists.
- Everyone is a household shopper: to grow penetration, FMCG marketers should be aiming to drive mass reach among all shoppers.
- Online grocery shopping is growing: it’s also more considered and less impulsive than in-store shopping. FMCG marketers must consider how they reach and influence online shoppers, who typically tend to be younger. Out-of-Home is an effective channel to reach younger audiences, who spend more time out-and-about.
- Advertising during difficult times drives higher sales: advertisers need to keep advertising.
The research was conducted in May 2022 from 600 consumers nationwide, sourced from a nationally representative Pureprofile panel. Access a copy of the research here.