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CEOWORLD magazine - Latest - Lifestyle and Travel - APAC Consumers Exhibit Cautious Spending Amid Economic Uncertainty – Detailed Trends

Lifestyle and Travel

APAC Consumers Exhibit Cautious Spending Amid Economic Uncertainty – Detailed Trends

According to McKinsey’s latest ConsumerWise Survey, consumers in key Asia-Pacific (APAC) markets have become increasingly cautious and thoughtful in their spending habits since the beginning of the year. The report indicates a trend of trading down as consumers seek to save money, although selective splurging continues.

Consumer confidence remains higher in India and China compared to APAC’s more advanced economies, likely due to the growing middle and upper classes in these regions. However, consumer sentiment in advanced APAC economies is less buoyant compared to Europe and the United States. Australia’s economic activity has nearly stalled, and Japan’s economy contracted in the second quarter, primarily due to the impact of the Noto earthquake in early 2024 and slowing growth. Despite a faster-than-expected economic expansion in South Korea, consumer confidence there has declined, with Gen Xers and baby boomers displaying more pessimism than millennials and Gen Zers.

In China, consumer optimism increased in the second quarter, largely driven by younger generations. Conversely, confidence in India declined ahead of national election results, with a notable drop among baby boomers. Spending intentions vary across the region: Indian consumers are inclined to spend on essentials and semi-essentials like fresh produce and international travel, while Chinese consumers are increasing spending on categories like fresh produce and fitness but decreasing spending on cruises, food delivery, and nonalcoholic beverages. In Japan and Australia, net spending intent is largely negative, except for essentials like groceries and gasoline, with minimal inclination to spend on luxury and nonessential items. South Korean consumers exhibit a negative spending intent across all categories.

The survey also highlights a rising demand for both physical and digital retail experiences, known as “phygital” shopping. South Korea, China, and India show high levels of omnichannel engagement, with over 50% of consumers in these countries expecting to use multiple shopping channels across all categories (excluding certain items in South Korea). Australian and Japanese consumers prefer a mixed shopping approach, with in-store purchases dominating for groceries and personal care products, while omnichannel methods are favored for sports equipment and electronics.

Despite economic uncertainty leading to increased savings, APAC consumers are still willing to spend more in certain categories. Between 60% and 80% of consumers in India and China are increasing their overall spending, while fewer than one-third of consumers in Australia and South Korea are splurging on travel and dining. Japanese consumers, in particular, are spending more on jewelry and accessories. Overall economic optimism has waned since the start of the year, with over 75% of consumers opting for budget-friendly alternatives. However, fewer South Korean shoppers are trading down compared to the previous quarter.

APAC consumers are actively adapting their shopping behaviors, including switching brands, trying new digital shopping methods, and choosing private-label brands. Over 60% of consumers in the region cite the pursuit of better value as their primary motivation for changing brands or retailers, with quality and novelty also playing significant roles. This shift is most pronounced in China, where 86% of consumers have altered their shopping behavior in search of better value, a seven percentage point increase from the previous quarter. In contrast, Japanese consumers are exhibiting slower behavior changes, showing greater brand loyalty and preference for familiar shopping channels.

 

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CEOWORLD magazine - Latest - Lifestyle and Travel - APAC Consumers Exhibit Cautious Spending Amid Economic Uncertainty – Detailed Trends
Anna Siampani
Anna Siampani, Lifestyle Editorial Director at the CEOWORLD magazine, working with reporters covering the luxury travel, high-end fashion, hospitality, and lifestyle industries. As lifestyle editorial director, Anna oversees CEOWORLD magazine's daily digital editorial operations, editing and writing features, essays, news, and other content, in addition to editing the magazine's cover stories, astrology pages, and more. You can reach Anna by mail at anna@ceoworld.biz