New OC&C research shows Australia's consumers splitting into two speeds, with 48% of higher-income shoppers planning to spend more against just 24% of lower-income shoppers. Retailers winning on either value or experience are growing, while brands stuck in the middle are under pressure. Pricing to the average now misses both ends.
The Take: Your market is no longer one audience. Australia has split into a two-speed consumer, and pricing to the average now misses both ends. Winning means choosing a side and building for it, not straddling the middle and hoping.
Between the lines: New OC&C research on Australia's Retail Proposition Index found 48% of higher-income shoppers expect to spend more over the next year, against just 24% of lower-income shoppers, with 43% of that lower-income group planning to cut back. The average hides a market pulling apart at both ends, and a campaign built for the mythical middle shopper now speaks to almost no one.
Who wins: The retailers gaining ground picked a lane. Woolworths banked A$400 million in cost savings to defend its value credentials, while Mecca's Melbourne flagship pulls around 50,000 visitors a week by selling experience over discount. Sit with that. One won on price, one won on the opposite and both grew. The same research had Dan Murphy's slide ten places on its proposition index since 2024, a warning about what happens when a brand gets stuck between the two.
The gap between higher and lower-income Australians expecting to spend more next year
The pattern: The businesses caught in the middle are the ones under pressure. A proposition that is neither the cheapest nor the most special reads as forgettable to a shopper who has turned ruthless about where the money goes. This is not the cost-of-living headline from last year. It is a lasting split in how two groups of Australians decide what earns their money. 61% of affluent shoppers say they will pay more for better quality, and 38% of lower-income shoppers will still stretch for the right thing. Both groups will pay. Neither will pay for vague.
For Australian operators: Decide which speed you serve and price the proposition to match. If you compete on value, make the saving unmistakable. If you compete on experience, make it worth the premium. Cut the middle-ground messaging that tries to be a little of both. Test your offer against the two-speed split, not a blended average that describes no real customer.