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Total consumer spending is on the rise. According to data from Trading Economics, total spend was nearly $300 billion higher in the U.S. in September 2023 than the previous year.
At the same time, however, disposable personal income is falling — compared to 2022, consumers collectively have $60 billion less to spend.
As a result, buying behavior has changed. To keep sales steady and drive consistent customer retention, brands can’t afford to fall behind.
Here’s a look at 10 top shifts in consumer spending, what’s driving the changes, and how companies can stay ahead of the curve.
When it comes to spending habits, there’s no one-size-fits-all approach that works for every shopper in every situation. Instead, it’s a combination of factors such as price, income, product availability, and quality that ultimately drive decision-making.
Changing economic conditions, however, have set the stage for significant shifts in consumer spending habits, such as:
According to the “2024 Consumer Research” report from Salsify, 39% of customers say they’re now focusing on budget-friendly buying options. It makes sense: With costs rising and disposable income shrinking, buyers must prioritize what matters to make their money go further.
To help combat economic uncertainty, 23% of customers say they’ve embraced online shopping. The sheer volume of online options provides more choices for customers looking to find their preferred product at the right price.
Close behind budget-friendly buying is the prioritization of essential purchases, with 35% putting the essentials first.
Ideally, customers want lower prices. But this isn’t always possible — ongoing challenges with materials sourcing, supply chains, and logistics can leave companies with no choice but to increase product costs.
Options such as discounts and loyalty programs, however, can help brands connect with buyers who might otherwise pass on a purchase.
According to Statista, 82% of buyers say they often compare prices before making a purchase. For brands, this creates an incentive to ensure that product pricing is in line with competitors. If higher prices aren’t optional, brands must be prepared to clearly communicate why customers should pay more.
While impulse buying remains a solid source of revenue for brands, 26% of customers say they’re adopting a more cautious approach.
Thrift and secondhand options are also on the rise, with 18% of consumers going this route.
Digital coupons and discount apps are becoming more popular as a way for customers to save money on preferred products. Embracing this trend gives brands more opportunities to reach potential customers.
Salsify’s consumer research also found that 19% of buyers have reduced the frequency of their shopping trips. This means brands have fewer chances to get things right. If customers walk away without making a purchase, more time between trips means more money lost for businesses.
Finally, there’s a growing trend toward delaying or postponing purchases, especially those that are more expensive. Here, brands can benefit from offering targeted discounts to consumers who have repeatedly visited specific product pages but haven’t made a purchase.
It’s also worth noting that many of these changes occur in concert. For example, buyers might increase their focus on budget-friendly options and might choose to delay or postpone purchases until products go on sale or discounts are available.
There are several underlying reasons for these shifts in consumer behavior, including inflation, accessibility, and economic uncertainty.
According to Statista, While inflation rates are down from a high of 9.1% in July 2022 to 3.1% in November 2023 in the U.S., this is well above the 1.2% seen in November 2020.
With everything from food to consumer goods to energy showing sustained price increases, consumers have become more considerate and deliberate in their purchase choices.
As noted by Retail Dive, 37% of U.S. buyers made mobile purchases from November 2022 to January 2023, up from 29% the previous year. Although the uptake of mobile buying began in response to pandemic pressures, it remains popular thanks to its convenience.
Mobile solutions also make it easier for customers to compare prices and products across multiple brands simultaneously.
In the U.K., for example, 2022 government survey data found that 91% of adults said the cost of living is an important issue, and 92% said their cost of living has increased over the last year. As a result, 66% were spending less on non-essentials, and 54% were worried about heating their homes through the winter.
As customer purchase habits change, companies need ways to stay ahead of the curve. This is because staying still is effectively falling behind.
Buyers won’t wait around until your brand figures it out — instead, they’ll seek out competitors that better meet their needs. To keep pace, three strategies are critical.
Customers expect brands to offer digital purchasing options — and expect a seamless purchase process.
As a result, buyers are doing their homework before spending any of their hard-earned money: 43% of customers say they’re now researching reputation, customer service, and delivery times. In addition, 42% say they’ve made purchases directly through social media.
To succeed in this digital-first market, brands can’t afford a piecemeal approach. To meet buyers when, where, and how they prefer, omnichannel is the best option. This means creating consistent experiences that buyers can access anywhere, anytime, without having to start from scratch.
Despite the rapid rise of ecommerce, brick-and-mortar stores aren’t down and out just yet, with 68% of consumers saying they still make in-store purchases. Priorities for customers buying in-store include automation and sustainability — 79% say they will change their habits based on sustainability.
For brands, making the most of brick-and-mortar means embracing automation options such as contactless payments and self-checkouts while simultaneously highlighting any efforts in sustainable sourcing and product production.
Personalization drives purchases, with 70% of U.S. consumers saying they’re more likely to buy a product if there are personally relevant images, videos, or text on product pages. In addition, companies can connect with prospective buyers by creating personalized email and sales campaigns that use historical purchase data to inform specific discounts.
For example, if customers regularly purchase the same products at a set frequency, brands can create a targeted offer for these products to help boost customer loyalty.
Buying behaviors aren’t static. Customer preferences and priorities change over time in response to market conditions, available income, and product costs. As a result, brands need to build and maintain new shopping experiences that both capture customers' attention and keep them coming back.
Achieving this goal starts with understanding what customers want right now, along with a recognition that these behaviors will evolve. By creating a digital-first, omnichannel experience that aligns with current customer behaviors, businesses gain the agility they need to meet existing expectations and embrace future purchase preferences.
Doug Bonderud (he/him) is an award-winning writer with expertise in ecommerce, customer experience, and the human condition. His ability to create readable, relatable articles is second to none.
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