Australian consumers are turning their backs on major brands in favour of the lowest-priced options as the cost-of-living crisis squeezes family budgets ahead of the Christmas shopping rush.

Almost two-thirds (60 per cent) of shoppers in Australia now say they are prioritising cost over brand loyalty, and 23 per cent don’t feel they can afford to be loyal anymore, according to a survey of 2000 Australians by Emarsys.

It comes as retailers predict consumers will be more budget conscious this Christmas, with Roy Morgan data published on Monday revealing consumers intend to pare back their gift spending.

Retail Doctor Group chief Brian Walker said the data indicates frugality will be top of mind for many shoppers this Christmas, with big brands set to double down on price and promotions.

“This will be the Christmas of the bigger retailers, and I include Amazon in that mix, that have got the scale and the fulfilment machinery to drive hard,” he said.

The Black Friday and Cyber Monday shopping weekend is shaping up as a big one, Walker said, because retailers are looking to clear excess inventory to consumers hunting for good bargains.

“We’re talking about two thirds of the sector [mortgage-holders and renters] being directly impacted upon by this high cost environment,” he said.

“Consumers are forced to watch their spending more closely than ever before.”

Price tops loyalty for shoppers

With discounting front mind for both shoppers and retailers this Christmas, the Emarsys data shows most people are actually only loyal to brands because of promotions and rewards.

That sort of loyalty is paper thin though, with 63 per cent of Australians initially attracted by deals saying they would be willing to switch to another supplier if their products were actually cheaper.

Walker said retailers are acutely aware that price is increasingly important to shoppers because they’re keeping a close eye on website searches and other consumer analytics.

It’s already showing up in marketing, with Officeworks on Monday spruiking commitments like its lowest price guarantee in a press release about their Black Friday and broader holiday offering.

Officeworks boss Sarah Hunter said 65 per cent of Australians are worried about the cost of living and were making changes to their shopping habits in response.

“The market for Black Friday and deal-seeking continues to grow and why we expect more people than ever to be engaged in the sale period this year,” she said.

Retailers like Officeworks will be competing over fewer consumer dollars the latest Roy Morgan and Australian Retailers Association (ARA) projections indicating that almost a third (30 per cent) of Australians will look to reduce their Christmas spending this year.

Average gift spending is expected to be $646 per person, which is down from $700 in 2022.

ARA chief Paul Zahra expects “more considered and deliberate” shoppers this Christmas.

“Many Australians are under significant financial pressure, and their Christmas gifting behaviour will reflect this,” he said.

“A big part of their buying mentality will be geared towards bang for their buck. Shoppers will actively seek out good deals but they’re still looking for gifts that reflect their personal values.”

Walker said the key to Christmas for retailers will be maintaining profit margins amid “deep discounting”, with big name publicly listed companies facing a difficult balancing act.

“The top line sales will be similar to previous years,” he said.

“The mix will be different, the challenge will be in the margins.”