Australians poised to spend as rates fall but want better deals

A new survey indicates that 70% of Australians are prepared to increase spending as interest rates continue to fall, according to research from Manhattan Associates.

The study surveyed 500 Australian consumers and found that 72% have currently delayed significant purchases due to ongoing economic uncertainty and cost-of-living pressures. Despite this cautious approach, the data suggests there is pent-up demand ready to be released if favourable conditions persist.

Raghav Sibal, Vice President, APAC at Manhattan Associates, commented on the broader context of Australian consumer behaviour:

"Consumers are understandably cautious after a long period of high interest rates and rising costs. But the data shows they are not permanently withdrawing from the market. Instead, they are waiting for the right signals, such as rate relief and stable prices, before resuming larger purchases. That presents both a challenge and an opportunity for retailers."

The survey highlighted that promotions and discounts from retailers are likely to have a more significant impact on consumer spending decisions than additional economic interventions. Of those surveyed, 36% stated that promotions and discounts would encourage them to spend more, while 34% said stability in product pricing would enhance their confidence to shop. Only 16% believed that further rate cuts alone would prompt them to return to stores.

Retail response

The research underscores the importance of pricing strategies, loyalty programmes and tailored offers in influencing short-term consumer behaviour, even as broader economic conditions remain in flux.

Sibal noted the need for proactive effort from the retail sector, stating:

"Retailers shouldn't sit back and wait for conditions to improve. Australians are telling us they want value and predictability. Transparent pricing, compelling promotions, and seamless service will be critical to building trust and encouraging people to spend again."

Optimism in select categories

Manhattan Associates' findings indicate a cautiously optimistic outlook among Australians. As interest rates ease, spending is expected to return first in sectors such as home appliances and furnishings (22%), clothing and accessories (21%), and leisure products. These categories are likely to benefit as consumers reconsider purchasing plans over the next six months.

Retailers are advised to act swiftly to ensure operations are aligned with this expected uptick in demand. Sibal described the evolving expectations of shoppers and outlined how businesses can position themselves effectively:

"Consumers will return, but they'll do so with sharper expectations. They want retailers who can adapt quickly, whether that's ensuring the right product availability, offering seamless online-to-offline experiences, or providing meaningful value at the checkout. Retailers who can deliver on all of these fronts will ride the recovery and secure long-term loyalty."

Operational priorities

The research findings point to the necessity for retailers to focus on supply chain resilience and unified commerce strategies. By connecting inventory, pricing and customer engagement across sales channels, retailers can better position themselves to meet renewed demand when economic sentiment improves.

Sibal emphasised this operational imperative, adding:

"Resilient supply chains and unified retail experiences are essential. Australian consumers have shown they are waiting for the right moment to spend again. Those retailers who act decisively now to improve operations will be the ones who benefit most when confidence returns."