PwC has released its latest Consumer Markets Outlook, offering a detailed look at how Australians are spending and what businesses can expect in the months ahead. This year’s report highlights several shifts that may come as a surprise.
Despite ongoing cost-of-living pressures, discretionary spending has grown. Older Australians are driving much of this growth, while younger age groups are pulling back. Physical retail remains dominant in Australia, even as online shopping expands. Trends among Gen Z continue to reshape categories, from food to in-store experiences. Together, these insights paint a picture of a market that is changing in uneven but opportunity-rich ways.
Understanding these shifts is essential for businesses planning marketing activity, investment decisions and customer engagement strategies. Below is a summary of the key findings and what they mean for your organisation.
Spending patterns show unexpected resilience
One of the more notable findings is that consumer discretionary spending rose 1.4 per cent in the June quarter, with overall retail sales increasing by 4.6 per cent over two years. This makes it the strongest two-year period of growth on record. PwC forecasts a further 3.9 per cent growth in FY26. On the surface, this may seem inconsistent with the economic mood, but it reflects the way Australians are adapting their spending rather than reducing it altogether.
The most surprising detail is the generational divide. Older Australians aged 65 and over have increased their real spending per capita. In contrast, younger age groups have reduced their spending and are actively adjusting habits to manage financial pressures. This difference has direct implications for audience segmentation, product positioning and messaging.
Online shopping grows, but physical retail still matters
Australia continues to lag behind markets such as the US and UK in online retail penetration. Online accounts for about 15 per cent of total sales, compared with 20 to 27 per cent internationally. This means physical retail still plays a major role in the buying journey. Australian consumers continue to value the in-store experience, social interaction and the ability to see and feel products before purchase.
PwC notes a tight supply of retail space, which may lead to rising rents. For businesses, this underscores the need to make physical locations work harder. Stores are no longer just transaction points. They act as brand experiences, discovery zones and content opportunities, especially among younger audiences.
Gen Z continues to influence cultural and purchasing trends
Gen Z’s influence goes beyond digital behaviour. Their preferences are shaping product categories and shopping experiences. PwC highlights the rapid rise of health-related food trends, such as the surge in cottage cheese popularity, which was driven heavily by younger consumers on social platforms. Gen Z also tends to seek stores that offer something social or photo-worthy, turning retail into an activity rather than a necessity.
This trend brings opportunities for brands willing to test new formats, collaborate with creators or add surprise elements to physical locations. If your business wants to attract younger audiences, leaning into shareability and creating an engaging experience is increasingly important.
Value seeking is reshaping purchases
Despite pockets of spending strength, cost pressures remain real. 74 per cent of consumers say rising costs are a major concern, and more than half feel financially insecure. As a result, Australians are seeking value in more deliberate ways. This includes choosing less expensive holidays, reducing dining out and turning to second-hand markets. PwC reports a rise in resale, reconditioned goods and lower cost lifestyle alternatives.
Some categories, however, continue to perform strongly. Outdoor and recreation goods grew by 11.1 per cent year on year. Pharmacy and cosmetics grew by 9.5 per cent. Meanwhile, alcohol consumption is falling, especially among younger cohorts. For businesses in the health, beauty or outdoor lifestyle sectors, these trends indicate healthy demand.
What this means for your marketing
- Segment your audience with care.
Not all age groups are behaving the same way, and your messages should reflect that. - Experience matters.
If you have a physical retail presence, consider how to make it experiential, social and aligned with what younger consumers (if they’re in your target market) find appealing. - Provide choice for perceived control.
Emphasise value, wellbeing and smart lifestyle choices. Consumers are looking for brands that help them feel in control rather than indulgent. - Monitor and respond to emerging trends.
Align your content calendar with emerging behaviours such as the rise of resale, wellness and experiential retail.
Businesses that adapt quickly, balance online and offline strategy, and align with value-driven behaviours will be well placed to navigate the year ahead.
