Australian shoppers adapt to changing economic landscape

Recent data tells us consumers are adopting more prudent spending habits and trimming discretionary expenses. But with a savings mindset, some shoppers are finding ways to still indulge in the occasional luxury.

"While searching for a better deal requires effort, it can be a valuable strategy for offsetting budget pressures."

The latest figures from the Australian Bureau of Statistics show the Australian economy has slowed this year due to the impact of rising interest rates and inflation. And financial pressures are further exacerbated by rising rental costs for some households.

The annual pace of growth for the economy slipped to 2.1 per cent at the end of June, from 2.7 per cent at the end of 2022, confirming a marked slowdown in the first six months of this year.

The economy has slowed

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Rental increase are hurting renter cashflow 

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Household budgets are being squeezed. According to a report on Australian Retail by ANZ Client Insights & Solutions, we are witnessing a noticeable contraction in consumer spending particularly in discretionary items like clothing, furniture and entertainment.

Household spending through the year by category, current price, calendar adjustment

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In the 12 months to September, consumers started to rein in spending on certain discretionary categories with department stores declining 3 per cent and specialty retail dropping 6 per cent in the same period. But that is not the whole story.

Smart shoppers

Amid a constant stream of news reminding us to be frugal, many Australian consumers are displaying resourcefulness – suggesting their economic situation may not as dire as first thought.

Savvy shoppers are seeking better deals for things they’re already spending on, including mobile plans, energy services and household necessities. While searching for a better deal requires effort, it can be a valuable strategy for offsetting budget pressures.

Consequently, more people are turning to cashback programs to secure better deals while shopping. Just a few years ago, inflation wasn't a topic that dominated discussions and chasing an 8 per cent discount would not have been a top priority for consumers.

However, with inflation now pushing up the price of consumer goods and other items, consumers are turning to cashback programs, especially on larger purchases.

ANZ customers can access cash back platform Cashrewards in the ANZ App, to help them earn a portion of their spend back in cash when they withdraw it from their Cashrewards account into their bank account.

“Shoppers appear to be more cautious in their spend on some retail categories, but travel and experiences continue to grow. We see Cashrewards members diligently looking for the best deals possible,” said Cashrewards Chief Executive Officer Anthony Seymour-Walsh.

Consumers are timing their purchases to coincide with sales and events promoting higher cash returns to maximise the value of their purchases. Additionally, the rise of marketplace sellers like Amazon, eBay, MyDeal and newcomer Temu indicates consumers are actively seeking the most favourable deals.

Shifting spending behaviour

Rather than reducing their expenditure on sectors like travel, fashion and retail, consumers are using programs like Cashrewards to make the most of their spending.

Making better use of your existing resources is at the heart of financial wellbeing. While it may not appear substantial at first glance, securing the best possible deals when shopping is an effective way to boost your savings growth over time.

Sweta Mehra is Managing Director of Everyday Banking at ANZ