Consumers are spending more for less volume
A global study by NielsenIQ found that a basket of goods costing $100 in 2022 now needs $117 to fill the cupboard.
And consumers may be driven to buy less in some categories, even if they have more funds to work with.
While consumers open their wallets and become less guarded with their spending, the compounding effect of price increases means they’re still spending 17% more than they were for the same goods in 2022.
"As we head into 2025, large brands will need to work hard to preserve their market penetration," said Carman Allison, vice president of thought leadership North America, NIQ.
"Challenger brands in several categories are doing a better job of targeting consumer needs and are eroding brand loyalty. It’s important to understand the unique needs of your consumer segments to unlock growth.”
Rising food prices is Australian consumers’ top concern over the next six months, according to NielsenIQ's Mid-Year Consumer Outlook: Guide to 2025 report prepared using feedback of more than 17,000 online consumers in 23 countries.
More than a third (36%) of those surveyed were worried the cost of groceries, followed by utilities (23%), housing costs (21%), the economic downturn (14%) and rising interest rates (14%).
Many Australian consumers (41%) intend to spend less on out-of-home dining in the next 12 months.
The same proportion (41%) expect to spend less on clothing.
For out-of-home entertainment, cinemas, theme parks, shows and sports events, 37% of surveyed Australian consumers expect to spend less in the next 12 months, and 39% will cut back on food delivery and takeaways.
“Over the past six months, there has been a determined shift from cautious to intentional consumption habits. Consumers are willing to spend more but remain conscious of potential changes,” said Lauren Fernandes, vice president, global thought leadership, NIQ.
"Consumers are seeking value with every purchase in multiple ways. They are spreading their spending very purposefully—and expect to leverage any excess in strategic ways in 2025 and beyond.”
The study also found 30% of Australian consumers are likely to accept a product recommendation from their AI assistant, and 30% would leverage AI to automate and speed up their everyday shopping decisions.
Some 34% of Australian consumers say they are likely to spend more on a purchase because of an in-app challenge, point system or reward experience.
Aligning with the global figures, 60% of Australian consumer respondents say they will buy fewer snacks and confectionary products if prices continue to increase or remain high for the next three months.
More than half of Australian consumer respondents (55%) say they are likely to actively seek additional income streams beyond their primary job.
The rise and impact of GLP-1 drugs: Aligning with the global data, 31% of Australian consumers are likely to use a medication or drug to support weight loss.
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