As a result of the rising cost of living, consumers are apprehensive about their finances over the next twelve months and have less confidence in their typical spending habits. As a result of the unpredictability of inflation’s growth, the impact on consumer confidence has left consumers with little faith in the status of the economy, prompting them to become more sensible in their purchasing habits and selective in their product selection. Incapable of absorbing the rising expense of living, consumer confidence declines as prices continue to increase. In 2021, a stunning 82% of worldwide customers admitted to altering their buying habits in response to increased prices, up from 70% in 2019.
Although inflation is not a new phenomenon, the epidemic has exacerbated its effect on consumer confidence and spending patterns. Over one-quarter of respondents say that prices have increased by at least 8% over the past year, which is greater than the average global inflation rate.
The Modification of Consumer Attitudes
The majority of customers no longer view grocery shopping as a financially routine activity, but rather as an unpredictable and expensive job. In 2021, 65% of customers will agree that shopping is an expensive chore, compared to 58% of consumers in 2019; this indicates a significant shift in consumer financial attitudes over the past two years. As a result, the consumer begins the purchasing experience more rationally and frugally.
Consumers indicated that growing costs apply to both core staple essentials and non-essential products, refuting the idea that consumers should cut back on non-essential products in order to maintain financial efficiency, as all prices are rising. According to the results of a poll in which respondents were asked which products they believed had grown in price, the price of butter rose from 59% in 2019 to 65% in 2021. This continual increase has instilled greater prudence in customers and their buying habits, basically dictating which things shoppers choose to purchase in order to reduce their expenditure and enhance their shopping experience.
Alterations in Consumer Shopping Practices
As customers shop more strategically to stretch their dollars, they are less likely to be brand loyal and more likely to be on the lookout for special offers and other ways to save money. This decline in loyalty during the epidemic may have been attributable to the numerous lockdowns and limitations on the transportation of commodities, which limited consumer options. In 2022, however, this change is likely attributable to the substantial increase in living expenses. Moreover, brand and retailer loyalty will continue to decline substantially as consumers become increasingly motivated to seek out the greatest deals. It is essential to provide value and affordability in order to suit the expectations of the average customer of today. When food prices rise, 72% of worldwide consumers seek items that provide a better value for their money. It is vital not to identify the term “deal” with the lowest price, but rather to reassure consumers that they are receiving good value for their money.
Aspects to Consider
Even during periods of diminished financial confidence, it is essential to realize that consumers’ decisions will be influenced equally by a product’s value and cost. Consumers will engage in a sort of high-low consumerism in which they will want to save money on certain things while spending more elsewhere.
Brands must be more reactive and demonstrate that they are responsive to continuously developing demand states, as well as have the best interests of the consumer at heart. People are still attracted to advantages that provide moments of escape from the pressures of daily life, but they still want to save money without feeling bad after a shopping excursion.
As a result of the virus and the persistent increase in the expense of living, no one can predict the economy’s volatility over the next couple of years with certainty. As a result, customers who are aware of these developments will feel uneasy about the coming year, which will have a direct impact on their shopping habits and expenditure. We might anticipate an increase in the prevalence of high/low consumerism, characterized by individuals’ justification of spending money on particular things by saving elsewhere and an emphasis on the search for methods to save.