Kuala Lumpur, Malaysia – Around 57% of consumers in Malaysia plan to be more cautious with their spending in the next six months–yet still show a greater interest in spending and rewarding themselves. This is according to a joint research by Omnicom Media Group Malaysia (OMG Malaysia) and AI-driven research firm Vase.ai.
According to the report, low and medium-income consumers – categorised by their household income of those less than RM4,000 and those averaging between RM4,000 to RM9,000, respectively – reward themselves through functional spending, e.g eating out, groceries, homecooked food, and food delivery.
The research also found that this contrasts with the spending habits of high-income consumers–those that earn more than RM9,000–who focus on vacations, entertainment/leisure, and electronics.
It is also worth noting that rising living costs could potentially impact consumer spending and lead brands to wonder about their sales growth in the coming months. According to the research, only 23% of low-income consumers feel confident about their financial well-being in the next six months compared to 44% of high-income consumers.
Moreover, trust and brand confidence were the primary influence of brand stickiness across all three consumer groups, the research found, followed by the brand offering the best value. Meanwhile, low-medium consumers tend to stick with a brand if it is easy to find and use, while high-income consumers gauge based on brand familiarity.
Additionally, social media platforms and e-commerce marketplaces are now present in the entire consumer purchase journey, unlike in the past where they were mainly in the top and bottom of the consumer funnel. Shopee, Shopee Live, TikTok Shop, and TikTok Live are gaining popularity and surpassing Instagram, the research found. Meanwhile, adoption for Facebook Marketplace remains low.
In terms of essentials, groceries and eating out are the top two essential items consumers spent on, followed by toiletries, homecooked foods, and household cleaning products. Spending has increased on essentials in the past six months, the research said. This category of items has become a priority for consumers due to their affordability, promotions, and discounts.
For semi-essential categories, consumers mainly spent on clothing and skincare items, followed by healthcare, entertainment/leisure, and cosmetics. Spending in this category has remained stable, with reductions in cosmetics and toys. Purchases in this segment are driven by their value for money, durability, and high-quality.
Lastly, electronics and vacations were the most common expenditures in the non-essential category and overall, the spends focused on premium quality and items that reflect personal taste. That said, 24% of consumers surveyed have not spent on non-essentials in the past six months. Spends on luxury accessories, fitness equipment, automobiles, and designer clothing have also reduced, marking a shift towards prioritising necessities over discretionary items.
Kiron Kesav, chief strategy officer at OMG Malaysia, said, “While there have been various reports regarding the economic uncertainties, rising prices and consumer confidence in Malaysia, we wanted to understand the finer nuances of the consumer sentiments and deduce what to expect in the immediate future. Leaning on the AI-driven insights gathered in the research, we unravelled a sense of how Malaysians from various walks of lives mitigate the financial uncertainties while also finding avenues to reward themselves. It also sheds light on the pockets of opportunity that the brands could capitalise on while they themselves navigate these times of uncertainties.”
Meanwhile, Julie Ng, CEO and co-Founder at Vase.ai, commented, “Amidst the economic uncertainties this year, our joint report provides vital insights into consumer spending trends. It highlights the need for brands to adapt their marketing strategies to meet changing consumer behaviours influenced by economic challenges. The report stresses the significance of crafting relevant, well-positioned, and innovative brand messages to engage a more spend-conscious audience. We hope that this can help inspire brands with practical strategies to succeed in a fluctuating market.”
