Consumers careful about where they spend money - NAB

Bank's survey useful for business owners

Consumers careful about where they spend money - NAB

Consumers have become increasingly cost-conscious and also want to buy locally produced goods, according to the latest insights from NAB.

The NAB Consumer Sentiment Survey (Q2), which captured the views of over 2,000 consumers, showed cost-of-living pressures were a concern for Australian consumers.

The NAB Consumer Stress Index shot up for a second consecutive quarter, from 55.7 points in Q1, to 56.4 points in Q2.  Over the past three months, a net 72% of consumers participating in the survey noticed price rises for groceries, a net 66% for transport, and a net 59% noticed price rises for utilities.

Research showed consumers were more aware of price increases and that were tackling them by changing their spending and lifestyle patterns, NAB said. Releasing insights for business owners based on the report findings, the big four bank said demand for local, sustainable and value brands was rising, as was demand for fast and efficient service.

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The report showed 44% of consumers were more mindful of where they spent their money. Just over one third (35%) were much more conscious of buying Australia-made as opposed to an overseas product.  A similar portion (34%) said they were more mindful of supporting local businesses.

NAB executive general manager small business Ana Marinkovic (pictured) said these trends were likely to remain beyond the COVID-19 pandemic as consumers’ appetite for locally produced products grew.

“Since the onset of the pandemic, more customers are choosing to support local businesses and buy Australian made. This is reflected in our lending to local manufacturers over the past 12 months,” Marinkovic said.

She said lending to the industry was up 15% to $7.6bn in the year to June 2022. This was a “strong sign” that a growing number of customers were becoming more demanding about where and how the products they purchased were sourced.

“With ongoing pressure on global supply chains, we’re also seeing more business owners look at their own supply chain and identify where they can source product and materials locally to reduce the dependence on international suppliers,” Marinkovic said.

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Lisa Raciti, founder of locally made natural deodorant and skincare brand KIND-LY said demand for the brand had increased since the COVID-19 pandemic, which she credited to more consumers purchasing locally made products.

As a business owner based in Melbourne, Raciti said she was aware of the need to support local businesses and bring home industries that were “lost overseas”.

Although the company’s products were produced locally, due to insufficient demand from other businesses within Australia, her business relied on international suppliers for most of its packaging requirements, she said. 

“Further investment in local manufacturing would be a big help here,” Raciti said.

Over a quarter of consumers (27%) researched brand and product choices before buying, NAB insights showed. Just under one quarter (24%) made purchasing decisions based on “great deals”.

Just 11% of consumers purchased products based on delivery times and cost and 11% purchased online to avoid going to a store – a noticeable decline, NAB said.  Those buying products due to convenience (8%) and buying online and picking up in-store (3%) also declined.

For consumers who were feeling the pinch of cost-of-living pressures, NAB group executive for personal banking Rachel Slade said there were many things the bank could do to help, from discussing flexibility around home loan repayments, to providing tailored budgeting tools.