Rising costs reshaping NZ’s consumption habits

First launched in the 1970s, the latest installment of Otago University’s long-running Consumer Lifestyles Study has found that, perhaps unsurprisingly, increasing costs are having an impact on how people spend.

Nearly half of respondents said economic uncertainty had stopped them from making a purchase, up from less than a third in 2020, with 40% saying they were struggling to pay for essentials. 

Overall, the study split up the country into six distinct groups. The largest section was dubbed the Financial Strugglers, who accounted for 27% of respondents. As lead researcher Leah Watkins told rova news, this percentage is a substantial rise from the 16.5% recorded back in 2020.

“Financial insecurity is becoming more widespread. More than a quarter belonged to the financial strugglers segment, which is a significant increase from what we saw five years ago when we last did the survey. That group also now includes many people who are working full-time, who have university education, who have mortgages, etc. So it's impacting a broader range of New Zealanders….people we would consider to be middle income, but they don’t feel they have resources to fall back on or be able to engage in what they would want to in terms of consumption behavior.

“Within the segments too, we're seeing a lot of diversity in how people are responding to those cost of living pressures, and how it affects their outlook, sense of well-being and how they feel about New Zealand and about their future.”

As for the other five groups, they range from Mainstream New Zealanders who, in perhaps a sign of the times, only make up 23%, to such groups as Aspirational Materialists and Disengaged Drifters.

In her analysis, Watkins says changes in the sizes of these segments suggest an increasing fragmentation of consumers over the last five years.

“The segments have previously been relatively stable, but this time the proportions have changed noticeably. We always had what we've called the Contented Traditionalists along with the Ethical Pragmatists. Those were the larger segments, but now people are more spread.

“Even within age groups, if you're looking at the younger segments, some are really engaged with environmental and social concerns, but also quite materially acquisitive. 

“On the other hand you've also got a lot of young people in the disengaged segment, where it's not just finances, but they are just not feeling they have got support networks and are generally disengaged from a lot of the social and political issues that we ask about.”

As for where consumers are getting their information from, the study confirmed that the online space has continued its unstoppable march into our lives.

Respondents reported that they spend an average of up to three hours a day in the digital world, whether it be messaging, watching the news or working. 27% of them also spent around three to five hours a day watching content on streaming platforms such as Netflix and YouTube.

However, around two-thirds also felt that their consumption habits were not massively shaped by their time online.

Whether or not this is true remains up for debate, but it certainly shows that most people feel they shouldn’t be so easily convinced by the likes of influencers.

At the same time, Watkins notes that some people, particularly the disengaged, were not as confident they could spot misleading information online.

“We certainly have seen what you would expect to see, which is a decline in traditional media such as newspapers and magazines. Digital media is very much mainstream now. But even though people are digitally engaged, they don't feel that that's necessarily got a huge impact on them. Most people were still saying that personal recommendations from friends and family were the most important source of information. They felt that they weren't influenced overly by digital advertising, such as influencers, or by celebrity culture in general.

“Some segments were also less confident about their ability to identify misinformation or to judge whether a post was coming from an influencer. So, everyone is actively consuming digital media, but some are feeling more confident about their ability to do that than others.”

Overall, the study’s authors report that New Zealand’s consumer environment is markedly different compared to just five years ago.

Although defined most notably by economic caution and price sensitivity, the landscape has become increasingly diverse, with businesses and policymakers warned about the limitations of thinking about consumers as a monolithic entity.

Image credit: Simon Kadula on Unsplash