As many consumers worry about a possible coming recession, brands have prepared to answer the daunting question: how will consumer spending habits change?
At CommerceNext this week, Forrester analyst Sucharita Kodali said current gas spending data suggests buyers are “paying top dollar for wants, not needs.” A recent consumer survey from Pitney Bowes confirms this sentiment, indicating that 49% of consumers, including 60% of millennials, plan to buy more online in the next six months, as companies mark down products such as than the casual clothes, appliances and furniture that have accumulated in recent months.
“This summer will present both new challenges and new opportunities for brands,” said Vijay Ramachandran, vice president of market strategy, global e-commerce at Pitney Bowes. “Excess inventory and markdowns will impact profitability, but will also create new openings to sell as a large portion of consumers seek out deals, further aided by the return of Prime Day and other mid-term promotions. ‘year.”
A Jungle Scout survey, meanwhile, found that 52% of shoppers only buy products on sale or at a discount, while 51% are more compelled to make a purchase when they receive an offer.
This month, Target said it was marking down more products and canceling orders to deal with its inventory glut. American Eagle Outfitters is also introducing higher markdowns to offset spring inventory, while Walmart has already pivoted to more “aggressive” price cuts on apparel in its first quarter, CEO Doug McMillon said on Monday. last month.
And just weeks away is Prime Day, which 47% of Amazon Prime members plan to buy this year, according to Jungle Scout’s survey of 1,000 shoppers. Ninety percent say they’re likely to renew their Prime membership for another year, and 41% said they don’t mind the $20 annual membership increase.
This does not mean that everyone will be convinced to buy discounted products. According to Pitney Bowes, 15% of 2,000 online shoppers surveyed are not swayed by discounts, even as they cut spending amid rising inflation and interest rates.
Buyers split between spending more and spending less
The Jungle Scout report appears to suggest inflation is exacerbating retail bifurcation, with 32% of shoppers saying they spent less in Q2, while 24% spent more, a 4% increase from Q1 . The less-spending crowd is also down from the 38% who said their spending decreased in the first quarter.
Rising inflation has impacted 77% of shoppers’ personal spending, while 72% of shoppers are making fewer “fun” or impulse purchases due to current economic indicators, according to Jungle Scout.
The report linked consumer habits to brand loyalty, with 59% of shoppers saying they would buy a cheaper brand to cut costs. This is the main reason why consumers are currently cutting costs, before buying a more generic brand (51%), going without certain products (42%) and buying less of certain products (38%) . Additionally, the percentage of consumers who would abandon their favorite brand if a new one were more affordable increased by 12% compared to the previous quarter.
Online spending is slowing, but shoppers still want to limit in-store trips
It seems that if people reduce some of their expenses, it will come from their online budget.
More people (38% of shoppers) say their online spending fell in the second quarter, Jungle Scout said, compared to 24% of consumers who said their online spending jumped during the period.
When shopping online, some benefits are more important than others, with 74% agreeing the lowest shipping price was their top preference. Sixty-nine percent said they were looking for the lowest priced product.
There is a difference between shopping online today and during the peak of the pandemic, when people were still hesitant to shop in stores. And during that time, 56% said their motivations for shopping online had changed during the pandemic, according to Pitney Bowes.
The number one reason Pitney Bowes survey respondents shop online is to save a trip to the store, at 43 percent of shoppers of all ages. This includes 50% of Baby Boomers and 45% of Gen Xers, who don’t mind waiting for delivery.
Shoppers of all ages cited several reasons for shopping online. They said they find better deals online (36%), enjoy a wider selection of products (29%), and access unique products they can only find on the web (27%).
Fear of exposure to Covid-19, although significantly less of a deterrent to in-store purchases now than at the start of the pandemic, is still on the minds of 15% of consumers.
“The fact is, we are still waiting for the ‘new normal’. 2020 has seen unprecedented capacity constraints among e-commerce logistics networks. manufacturing. 2022 is shaping up to be the year of oversupply and price volatility,” Ramachandran said. “That said, the pandemic has ingrained some online shopping preferences. driven by the convenience of shopping online as an alternative to in-store experiences, we are now seeing the emergence of more consumers who have discovered that they really enjoy shopping online.”
Consumer perception of shipping speed has evolved over the past two years. In its Boxpoll weekly consumer survey, Pitney Bowes asked respondents if they were likely to pay for fast delivery when shopping online, compared to three months ago.
Two-thirds (67%) of consumers are no more likely to pay for faster shipping than three months ago as ‘date buying’ reappears with back-to-work and vacation plans . For those buying more online now, 33% said they would be more likely to upgrade shipping than before.