More Than Just the Bottom Line – Why Brands Can’t Forget Values When Focussing on Price

OPINION | "With New Zealand’s economic growth negatively impacted by COVID-19, consumer confidence has also taken a hit. After New Zealand recorded its first community exposure to Omicron at the tail end of 2021, Kiwis have entered 2022 with an abundance of caution, planning to tighten their wallets and pull back on discretionary spending. 

However, even with the pandemic – and now the Ukraine invasion – threatening New Zealand’s economy, price won’t be the only thing affecting purchasing decisions in 2022. Our research over the past two years has shown that the pandemic has had a significant impact on consumer attitudes, impacting the way they interact with brands. Consumers are now shopping with their hearts, choosing to support brands whose values align with their own. 

With brand values and frugality both top of mind for shoppers, brands are now faced with the difficult task of communicating values while also communicating value for money. And getting the balance right will be the key to success. 

Financial insecurity and spending confidence

In our most recent Global Consumer Barometer Study, which surveyed 530 respondents in New Zealand between 4th-8th January 2022, almost half (46%) of New Zealanders said they were concerned about their financial security as a result of the COVID-19 pandemic. Further, just over one in three (38%) said they were worse off financially than before the pandemic began. 

Not only are Kiwis concerned about their finances, but only one in three (32%) reported that they felt secure in their employment, further adding to their financial stress. But it’s not as simple as having overspent at Christmas – Kiwis were already concerned about their finances leading up to the 2021 Christmas season. Almost half (48%) said they had been worried about not being able to afford Christmas last year; around one in five said they hadn’t saved as much as they normally would (18%), and one in three hadn’t saved at all (29%). 

In the current climate, shoppers will continue to spend cautiously well into 2022, with our research showing that Kiwis expect to spend less on discretionary items such as eating out (40%), holidays (39%), leisure activities (29%), and entertainment (27%). However, spending is expected to go up on essential items such as household cleaning products (17%) and healthcare (20%) this year. 

Why brand values matter

Understanding consumers can be complicated because they don’t always fit neatly into a box. Shoppers can hold complex and sometimes contradictory beliefs, such as the need to save money while also feeling drawn to support brands with particular values. 

New Zealand shoppers today are completely different than the shoppers we knew in 2019, pre-pandemic. Their priorities have changed. Having lived through one of the most significant health crises of our time has forced people to re-evaluate what matters to them, and we’re emerging on the other side with a population that now prioritises their health and spending time with loved ones, as well as having a greater concern for the environment and social issues. These are fundamental changes to core beliefs which are not simply going to disappear just because money is tight. 

Our most recent Barometer supports these sentiments, with Kiwis stating it’s important for them to purchase brands who care about their contribution to society (69%), implement policies that benefit the environment (69%), and who behave in an ethical manner (64%). It was also very important to shoppers that brands have fair prices (92%) and high-quality products and services (88%). 

Walking a fine line

As shoppers proactively seek out brands whose values align with their own, brands and retailers will need to ensure their own values are made clear. A company’s approach to sustainability and environmental issues, in addition to any support for social and humanitarian causes, must be communicated to customers, loudly and often. 

However, given the current economic climate, it’s equally important for brands to have clear communications around pricing and value for money. Although Kiwis want to support brands who do the right thing, financial concerns are taking the front seat. There may be situations where shoppers need to sacrifice their values in order to stick to a budget, whereas others may opt to stop buying some products altogether. 

As a shopper, having to forgo values in favour of price does not make for a feel-good shopping experience. Brands and retailers who are able to still provide shoppers with socially conscious, feel-good products, while also catering to budget-conscious shoppers, will be able to create more positive customer experiences. It’s a delicate balance, indeed, but those who are able to make consumers feel like they’re doing the ‘right thing’ while simultaneously communicating value for money, will go a long way to winning customers and keeping them coming back."

- By Stephen Walker, Regional Director, New Zealand, Toluna