Five Consumer Behavior Trends That May Last Into 2023
The combination of rising prices, increased costs of living and ongoing social upheaval prompted by the COVID-19 pandemic has resulted in financial problems for many consumers. As a result, consumers are growing thriftier and changing their behavior, according to NielsenIQ.
The consumer packaged goods (CPG) industry insights company identified five key trends that may last into 2023.
Change in priorities — Consumers are adjusting their spending habits and lifestyle behaviors in response to increased pressure on household budgets and ongoing concerns regarding a recession. Additionally, pandemic-prompted social disruption has pushed consumers to make mental and physical health their top priorities. Financial security is another important factor, which results in more restricted spending.
Reduced discretionary spending — At the start of 2022, consumers surveyed by NielsenIQ planned to cut back on mini-splurges like dining out, gym memberships, and away-from-home entertainment, focusing instead on the day-to-day essentials and prioritizing basic needs and necessities like utilities and groceries. These consumers plan to further tighten their belts as inflationary pressures continue to increase, resulting in greater cutbacks on food deliveries and other indulgences that they can instead enjoy at home.
The last time a significant decline in discretionary spending occurred was in 2020 during the initial months of the pandemic. Economic uncertainty is again causing consumers to adjust their behaviors across all aspects of life, from shopping to entertainment to maintaining a healthy lifestyle.
Staying at home — Lifestyle trends that increased in popularity during the pandemic are again rising in favor. These include food preparation and dining at home (cited by 44 percent of surveyed consumers), spending less on clothes and grooming (37 percent), and cutting back on treats like dining out (34 percent) and vacations (24 percent).
Selective shopping — In addition to being more mindful of how much they spend and what to prioritize, consumers are shopping differently. They intend to combat inflation by embracing a selective mindset.
Accordingly, many consumers are switching to buying lower-quality items and shopping more often at discount stores or traditional trade outlets. Brand loyalty has lessened, with 31 percent of consumers admitting to buying whatever is promoted; 27 percent buy whatever is cheapest, and 26 percent stop purchasing certain categories entirely.
This selective shopping is popular with all consumers who have been financially impacted by the pandemic and other economic factors, including those with high incomes who have not been strongly affected. Shoppers across the economic divide are seeking out discounts and promotional opportunities across multiple shopping channels and retail stores.
Private label preferences — Private label brands have a stronger opportunity as consumers shift their loyalties and make trade-offs. Alternate products that offer quality at a lower price provide greater appeal, with 20 percent of consumers saying they will opt for a private label to help manage their grocery expenses. In the United States, private label growth is prevalent in categories such as baking goods, health and beauty, dairy, household products, and deli foods.
NielsenIQ's research found that inflation may linger on beyond popular shopping seasons such as back to school and the winter holidays. As consumers seek ways to cut back on spending while saving for the future, retailers and suppliers will have opportunities to manage pricing across portfolios as they seek to retain customers.
When asked how they would prefer manufacturers deal with rising prices, 27 percent of consumers said they would rather see bulk or economy-size offerings vs. smaller sizes (8 percent) because it helps them deal with inflation. Other consumers seek to minimize waste (40 percent). These lifestyle changes and shifts in shopping behavior could become more pronounced across consumer segments if the cost of living continues to rise.
Chicago-based NielsenIQ is a global information services company providing CPG and retail companies with the data, connected insights and predictive analytics to power their growth.
NielsenIQ, an Advent International portfolio company, has operations in 90-plus markets, covering more than 90 percent of the world's population.
Source: Convenience Store News