Consumers ‘trading down’ to save money

Nearly 60 per cent of consumers are choosing to purchase lower-quality products to save money during the cost of living crisis.

Research by Cashrewards showed the impact the rising cost of living and higher interest rates are having on consumer shopping habits, with four in five consumers actively making a greater effort to get better deals.

Nicole Bardsley, CMO at Cashrewards, said of particular concern was that most shoppers are employing multiple cost-saving strategies, which presents an immense challenge for retailers.

“To capture those shoppers who are making a greater effort to search out better deals, retailers will need to ensure they stay top of mind, preferably via an ongoing relationship. And where shoppers are cutting back and trading down, retailers who can provide shoppers with ways of saving money will have the best chance of retaining their customers.”

The research also examined the use of cashback programs in the current environment and found that 52 per cent of shoppers participated in at least one program, and 68 per cent of shoppers under 45 are using a cashback program.

“In the current environment, with three quarters of consumers more committed to cutting back on non-essential spending, the research suggests the power of cashback by encouraging 62 per cent of members to spend more than they had planned is particularly significant.

“Similarly, two thirds of members say cashback programs encourage them to buy better-quality items, helping to offset the increased ‘trading down’ exhibited by more and more shoppers.”

The study of 755 randomly selected Australian shoppers found that 56 per cent thought cashback was better value than a rewards program.

“The research indicates that consumers today have a general preference for cashback over points across a wide range of retail shopping behaviours.

“The research demonstrates both the emerging presence of cashback programs and the role they can play, especially in this current environment, to help retailers engage new and repeat customers with tailored and bespoke offers that drive sales, referrals, and loyalty.”

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