7 minute read 16 Aug 2023
Women holding the product

How do brands redefine value in tough economic times?

By Michael Summers-Gervai

Director, Business Consulting, Ernst & Young, New Zealand

Customer-centric transformation leader. From strategy to delivery. Gets things done. Sports nut. Art buff.

7 minute read 16 Aug 2023

New Zealand consumers are changing their behaviour in the supermarket and the shopping mall. How do brands respond?

In brief:

  • The global cost-of-living crisis is ushering a new era of consumer behaviour in New Zealand.
  • Brands that redefine value, create complete experiences and strengthen their sustainability credentials will build relationships and resilience in recessionary times.

With the high cost of groceries and household essentials in the headlines, it is no surprise that New Zealand consumers are feeling the pinch. In fact, the cost of goods at the till is weighing more heavily on the minds of Kiwi consumers than petrol or energy costs, mortgage repayments or healthcare.

Since we launched the EY Future Consumer Index in 2018, we have tracked shifting consumer sentiment and behaviours across time horizons and global markets. The 12th wave of the Index collected insights from 21,000 consumers in 27 countries, including New Zealand, from 16 March to 14 April 2023.

The cost of groceries and other household essentials was the single biggest concern, noted by 66% of respondents, surpassing rising costs of fuel (51%), utilities (50%) and healthcare (43%), and dwarfing worries about interest rate hikes (30%) or job security (16%).

Cost of living crunch


of New Zealand consumers expect the cost of living to rise in the next six months


say they are spending less on non-essentials


say the rising cost of goods and services is making it hard to afford things.

The survey results are sobering. A quarter of consumers feel worse than they did four months ago, and around the same number expect to feel even worse in three years’ time.

Consumer confidence has taken a hit following aggressive interest rate rises and soaring inflation. Despite this, a significant percentage of Kiwis remain remarkably stoic.

New Zealand consumers are accustomed to the tyranny of distance and the logistical challenges that come with a nation of two narrow, mountainous and far-flung islands. They know this comes at a cost – and they feel this every day at the till.

However, the latest EY Future Consumer Index suggests the patience of a growing proportion of Kiwi consumers is wearing thin. The brands that listen and respond to what their customers are saying will be the ones that come out of the current cost-of-living crisis with stronger, deeper relationships. The EY Future Consumer Index suggests three clear areas for brands to focus on.

1. Redefine brand value

As the cost-of-living crisis cuts deeper, more than one in three New Zealanders (38%) are switching from name brand items to budget ‘home brand’ labels. This switching behaviour is occurring across multiple categories as large numbers of shoppers think twice about the label they choose.

Brand substitution is not new. What is new is the perception that store brands and supermarket private labels now have among New Zealand consumers. People once thought a cheaper price tag meant lower quality. This is no longer the case. In fact, 65% of New Zealanders say private labels and store brands satisfy their needs as much as branded products – including 63% of those with high incomes.


Brands must dig deep into their customer needs, behaviours, attitudes and demographics to understand how this will play out with their product portfolio. Customers understand that organisations collect their data; there is now an expectation that this information will be protected, but also that it will be used for their benefit.

For example, at a generational level, 30% of Gen Z consumers told us they would choose a store brand for beauty and cosmetic products, compared with 23% of Baby Boomers, 28% of Gen X and 26% of Millennials. It’s not too late for brands in this category to leverage their data to re-examine their customers and rethink their products. But if you don’t take these shifts seriously, someone else will.

At the same time, customers have caught on to some of the strategies that brands deploy to create perceptions of value without delivering that value. Nearly three- quarters (73%) of Kiwi consumers surveyed felt store brands had increased their prices in recent months and 75% had thought package sizes had been shrinking. More than half (54%) felt a growing cohort of private labels and store brands were charging premium prices.

While the cost-of-living crisis will abate, brands should be prepared for some conservative shopping habits to stick around. Customers who have forged lifelong connections with certain brands may revert to old spending behaviours. However, younger people without the same emotional attachment may never make the switch back unless brands can appeal to emerging customer values around sustainability, ethics and quality of service, as well as price.

2. Create a complete customer experience

New Zealand’s retail sector was late to embrace the online juggernaut or experiential retail – but these are rapidly becoming table stakes for today’s consumer.

Online shopping remains a frustrating experience for many New Zealanders, with expensive, slow or careless delivery responsible for 61% of all issues encountered, according to the EY Future Consumer Survey. (This echoes NZPost’s 2022 eCommerce Market Sentiments Report, which noted delivery delays as the top consumer frustration with online shopping in 2022.)

As more grocery and home delivery players knock on the nation's door, Kiwis are getting a taste of a seamless delivery experience. Some large consumers brands have recognised that a direct-to-consumer channel can deepen their relationships with their customers through direct touchpoints and streamlined delivery. Nike’s decade-long direct-to-consumer success story is one to emulate. After the footwear giant prioritised DTC in 2011, it made up 16% of brand revenues; by 2020, this had climbed to 35%.

New Zealand’s topography, geography and climate, coupled with its relatively sparse population density and limited infrastructure, make door-to-door deliveries a tough task. But brands must solve this challenge or risk irrelevance with younger demographics.
Michael Summers-Gervai
Director, EY

Consumers have been let down by logistics, and admittedly, New Zealand’s supply chain challenge is a hard nut to crack. New Zealand’s topography, geography and climate, coupled with its relatively sparse population density and limited infrastructure, make door-to-door deliveries a tough task. But brands must solve this challenge or risk irrelevance with younger demographics.

Sixteen per cent of customers we surveyed said they were planning to shop online less in the coming year. This sounds a warning bell and makes it vital that businesses address customer complaints as soon as they arise – or risk losing more customers.

At the same time, people who visit a bricks-and-mortar store today expect much more than a transaction. Global market leaders are making their moves. Take Ikea's first foray into New Zealand, slated for 2025, which won’t just be a gamechanger for budget-conscious shoppers. Beyond the Allen keys and flat-pack furniture, Ikea will set a new bar for experiential retail – one that allows customers to immerse themselves in the products through digital experiences, dining and a sense of discovery around every corner.

3. See sustainability as a long-term strategy

Kiwis may be proud of the tagline 100% Pure New Zealand, but 51% of New Zealand consumers define themselves as “sustainability passive”. While they are worried about climate change, biodiversity, clean energy, reducing plastic waste and more, 27% say sustainability is a low priority when they are weighing up a potential purchase.

The biggest barrier to shopping more sustainability, unsurprisingly, is the cost -– as noted by 59% of Kiwi consumers. More than half (53%) of New Zealand respondents agreed with the statement that “I mainly take environmental action when it saves me money”.

A clear call to action


Of consumers say companies must lead positive social and environmental change.

We are seeing consumers weigh up their choices against a ‘hierarchy of needs’. But that doesn’t mean they don’t expect brands to step up their sustainability efforts. Two in three New Zealanders agree that brands must be transparent about their environmental and social impacts, to behave ethically, and invest in sustainable production.

Kiwi consumers, with the memory of the New Zealand summer fresh in their minds, are increasingly attuned to the many shades of greenwash. They want brands to demonstrate a credible, clear and transparent commitment to sustainability. They just don’t want to pay for it yet. Taking care of themselves and their families is their first priority in the current climate, and that means sustainably takes a back seat. How do brands strike the right balance? The secret is to be authentic.


Consumer attitudes always change; but the unprecedented disruption of the last few years has reshaped almost every aspect of people’s lives. Brands must listen to the evolving needs of their customer, and in response, redefine their value, create a complete experience and deliver authentic sustainability.

About this article

By Michael Summers-Gervai

Director, Business Consulting, Ernst & Young, New Zealand

Customer-centric transformation leader. From strategy to delivery. Gets things done. Sports nut. Art buff.