Australian household spending fell for the first time in over a year in February 2026.
The RBA, in its May Statement on Monetary Policy, also alluded to this drop in consumer spending:
The response on consumption to lower real household incomes is assumed to be faster than the typical historical experience, given the share declines we have seen in consumer sentiment.
With this somewhat gloomy backdrop, it's time to assess what the implications could be for some beloved Aussie stocks.
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Coles Group Ltd (ASX: COL)
Coles is the most defensive name on this list, given its focus on supermarket retail.
As one of Australia's largest supermarkets, Coles benefits from defensive consumer spending. After all, consumers will always need to eat regardless of the prevailing economic conditions.
90% of Coles' revenue comes from its supermarket business, which may help protect it from a major economic slowdown.
However, Coles remains exposed to reduced consumer spending, which can negatively affect margins.
What's more, the ACCC's ongoing court case alleging illusory Down Down discounts, set to be resolved in May 2026, has increased regulatory risks, and Coles reported lower profit in its first half of fiscal 2026 despite higher sales revenue.
A sustained consumer pullback could further erode margins and profitability, leaving Coles uniquely exposed to any noticeable decline in consumer spending.
Woolworths Group Ltd (ASX: WOW)
One key difference between Woolworths and Coles is Woolworths' ownership of BIG W.
BIG W meaningfully increases Woolworths' exposure to consumer spending habits outside of supermarket retail.
In 2025, the unit posted an EBIT loss of $63 million, squeezed by clearance activity, soft discretionary spending, and operational complexity.
More recently, Bell Potter downgraded Woolworths shares to hold with a reduced price target of $35.50 (from $38.25), citing supply chain cost pressures.
Reduced consumer spending within this unit may lead to even more pain for Woolworths in the short-to-medium term.
Qantas Airways Ltd (ASX: QAN)
Australians tend to cut holidays and flights first when mortgage repayments bite.
Qantas, as Australia's flag carrier, is on the frontline of this reduced spending.
Analysts identify an economic downturn as a key risk that could cause corporate clients to cut travel budgets, directly hitting Qantas' most profitable customer base.
What's more, jet fuel costs have more than doubled since February 2026, which is set to hit Qantas earnings directly.
Qantas' loyalty program and domestic duopoly may provide some buffer, but be ready for Qantas' earnings to potentially be hit by macroeconomic issues.
Foolish Takeaway
None of these companies is in crisis, but they are exposed to a sustained drop-off in consumer spending.
Investors may want to consider diversifying into companies that service businesses or governments with sticky long-term contracts.
In the meantime, investors would do well to keep a close eye on discretionary spending data in the months ahead.
