Winning over New Zealand consumers: Rethinking cost, trust and AI

New Zealanders are price-savvy and AI-wary. How do consumer companies close the gap?

In brief:

• New Zealanders are among the world’s most price-conscious consumers and brand loyalty appears to be eroding.
• AI can enhance customer experiences, but 85% of Kiwis are sceptical.
• Business must introduce AI transparently, demonstrating its value to earn consumer trust.
  

Two new EY consumer surveys reveal a stark challenge: businesses must cut costs while enhancing customer experiences, yet trust in the technology that can help, artificial intelligence(AI), is low. In Aotearoa New Zealand, where consumers are both price-conscious and sceptical of AI, the question is clear: how can companies embrace AI without eroding consumer trust?

The latest EY Future Consumer Index, based on a global survey of 23,000 consumers – including more than 500 in New Zealand – paints a picture of deep uncertainty.

More than two-thirds of New Zealanders are concerned about the economy. Just 29% anticipate a recovery in the next year, and only 47% are optimistic about the future. More than eight in 10 (82%) New Zealanders say they are reassessing what matters to them.

Value for money has never been more important. New Zealand consumers are among the most price-conscious of those surveyed for the EY Future Consumer Index globally – and 80% of Kiwis expect to be even more focused on price in the years ahead.

Brand loyalty is on thin ice. Private label products – those owned by a retailer rather than a manufacturer – are increasingly favoured by consumers. In our latest survey, 42% say they are switching from name-brand items – nearly double the rate of June 2022.

‘Dupe culture’ among younger generations is making it even harder for companies to differentiate and command premium prices. Consider this: 46% of New Zealand consumers seek products that mimic popular or higher-end brands but are sold at a cheaper price. Why buy a designer water bottle for $75 when you can get a dupe from a big-box store for less than $20?

Consumers aren’t just cutting back. They’re rethinking what they value. And that means companies must think harder about what they stand for. Many brands have long resonated with consumers by offering something unique – like exclusivity, superior quality or simply being first in the market. But as price sensitivity climbs, brand loyalty crumbles, making it harder to compete on non-monetary factors.

Trust issue or trust solution?

Companies must adapt at warp speed. The rise of agentic AI –capable of autonomous decision-making – is set to transform industries with the force of a runaway train. Consumer brands are already using agentic AI to handle customer inquiries, optimise ad campaigns, manage inventory and forecast demand – automating decisions at a scale and speed far beyond human capability. But consumers are wary.

Nowhere is this distrust more pronounced than in New Zealand. The EY AI Sentiment Index reveals that:

• Only 28% of New Zealanders believe AI’s benefits outweigh the negatives (compared to 37% in Australia and 51% globally)
• 85% are deeply concerned about AI-driven misinformation (compared to 74% globally)
• New Zealanders are the least excited about AI’s future, with just 33% expressing optimism –far lower than South Korea (66%) or India (84%), for instance.

New Zealand consumers aren’t rejecting innovation, they are prioritising trust. Why? Because our strong local business culture and relationship-driven economy are built on trust. Companies must introduce AI in a way that’s transparent, thoughtful and aligned with consumer values.

Using AI with a human touch

The paradox is clear: consumers want better value and expect businesses to leverage AI, but they don’t trust it.

Some AI-driven applications are gaining traction with New Zealand consumers. More than half (54%) have ‘complete’ or ‘moderate’ trust in AI applications to tailor offers, promotions and special deals. Half are open to product purchase reminders, and 47% are comfortable with AI-generated content and augmented reality.

This tells us something: companies must openly communicate how AI is – and isn’t – being used. Consumers don’t want to be left guessing whether an AI model determined their mortgage rate, personalised their shopping experience or filtered the news they consume.

The percentage of consumers who have moderate or complete trust in AI-generated content and capabilities is growing by generation – which means there is growing acceptance of AI as a trusted tool.

But to win trust among more customers, not just Gen Z, tell them when AI makes a decision – and how. Instead of hiding AI in the background, leading brands will bring it to the forefront: “This offer was tailored for you using AI. Here’s how we do it.”

And place humans at the centre. New Zealand consumers aren’t just tightening their belts – they are taking back control. When people feel powerless over their future, they cling to what they can control: their spending decisions. Businesses should position as enhancing human expertise, not replacing it. The messaging should be clear: “AI helps us serve you better, but humans are always in control.”

A six-month sprint starts today

There’s good news within the protracted consumer pessimism: it’s not too late to change course.

The cost-of-living cycle still has time to play out, and the next six months offer a crucial window for businesses to elevate their investment and fine-tune their strategies. That means:

1. Assess your success factors – Understanding what once drove your success can shed light on what may be falling short today. Many companies believe they thrive because of their product, but often, success hinges on overlooked factors – like being first to market, in a prime location, or able to offer simple convenience. Challenge your own assumptions: are customers loyal to your brand or just your price point? A clear-eyed, objective reassessment could reveal untapped opportunities or critical vulnerabilities.
2. Redefine value beyond price – Consumers are scrutinising every dollar they spend, but that doesn’t mean they’re solely chasing the lowest price. More than ever, they’re looking for brands that align with their values, offer meaningful experiences and reward them for their loyalty. (My previous point of view on brand loyalty holds true.)
3. Invest in AI where it matters – AI adoption can’t just be about cost-cutting and automation – it needs to enhance customer experience, build trust and drive business efficiency in ways that consumers actually value. Using AI in ways that feel impersonal or opaque is a risky strategy. The companies that win will be those that keep humans at the centre.

You still have runway. Use it wisely to put your company in the best position to accelerate out of the downturn.