Digging Deeper

Below sits the supporting case. It covers why the old rules for reading customers have broken, what the Australian picture means across sectors, and how to respond.

The old rules for reading customers have broken

For decades, consumer sentiment and consumer spending moved together. When people felt worse about the economy, they spent less. That link could be relied upon.

Not anymore. McKinsey’s research shows the two have decoupled, especially since the pandemic. Sentiment remains poor, yet people keep spending. The old frameworks for predicting behaviour no longer apply.

Instead, McKinsey describes a value now consumer. They optimise every purchase for the value they perceive. They trade down in one category and splurge in another, often at once. About three-quarters report trading down somewhere, while many still intend to treat themselves elsewhere.

This is not irrational. It is just harder to predict from the outside. And it carries one clear lesson. You cannot read your customers off the news. You have to look at them specifically.

It also means sentiment still matters, just differently. Knowing how your customers feel is now a clue to read alongside their behaviour, not a substitute for watching what they actually do.

The Australian backdrop, and what it means across industries

The mood in Australia is cautious. The Westpac and Melbourne Institute Consumer Sentiment Index sat around 80 in mid-2026, among the weakest readings in its near fifty-year history, with cost-of-living pressures front and centre.

That caution shows up differently in every sector. In trades and construction, homeowners and businesses defer non-urgent jobs, gather more quotes, and weigh every large spend. In professional services, clients delay or trim engagements and scrutinise fees more closely than before.

In allied health, the effect is well documented. Around three-quarters of Australians say cost-of-living increases have affected their healthcare decisions, and roughly one in five report delaying or avoiding care because of cost. Much allied health is paid out of pocket, so it gets treated as discretionary when money is tight.

For not-for-profits, the squeeze reaches donors and supporters. Households under pressure give more carefully, expect to see the impact of their gift, and let regular donations lapse. Reading your supporters is no less important than reading a paying customer.

But none of this is uniform. Within any sector, some customers defer while others treat your offer as the one thing they will not cut. That split is exactly why you cannot assume. You have to read your own base.

Read your own customers, not the headlines

This is the core skill, and it is very achievable. The national mood is one signal. Your own data is far better.

Watch the things in front of you. Which services or jobs are holding up, and which are softening? Who is deferring, delaying, or scaling back? The patterns in enquiries, conversions, cancellations, and repeat business.

The signals look different by industry. A trades business watches quote-to-job conversion and deferred work. A professional firm watches proposals won and scope trimmed. A health practice watches rebookings and no-shows. A charity watches donation frequency and lapsed supporters.

You do not need a research budget for any of this. You need to pay attention and act on what you see. McKinsey’s advice to large brands scales down neatly. Understand your base in detail, and as close to real time as you can.

That granular reading of consumer sentiment is the difference between responding early and being caught off guard. A simple monthly note on the few numbers that matter to you turns scattered impressions into a pattern you can act on.

Make your value obvious

The value now is that customers pay for what they clearly see as worth it. So your job is to make that worth visible, not to assume it speaks for itself.

Explain outcomes, not just features. Be transparent about price and what is included. When customers can see the value and the cost plainly, the cost becomes a fair trade rather than a barrier.

What that looks like varies by trade. A tradesperson gives a clear, itemised quote and stands behind the standard of the work. A consultant frames the return their advice delivers, not just the hours billed. A health practitioner helps the client see their progress. A charity shows the donor exactly what their gift changed.

None of this is discounting. It is making worth, legible. The businesses that explain their value well rarely have to compete on price alone.