How Consumers Are Battling Inflation With a New Arsenal of Digital Tools — and What Retailers Can Do to Respond
As consumers grapple with rising inflation, they’re searching for new ways to manage their expenses. For many, that means turning to an arsenal of digital tools. A recent Gartner survey of over 300 consumers identified the changes consumers are making, and the tools they’re using, in response to the rising cost of living.
Faced With Rising Inflation, Shopping Habits Are Changing
Consumers are responding to the burden of unprecedented inflation by adjusting their shopping — online and in-store — to manage expenses. They aren’t just decreasing their shopping altogether, although many consumers are doing that: the majority of consumers expect to cut back on purchases or stop buying altogether in at least one product category (e.g., household items, personal care).
The Gartner survey revealed that most consumers are embracing one of three key approaches to shopping as a result of inflation. Those approaches include:
- Shift Shopping to Online: Decrease in-store shopping and increase online shopping (27 percent of consumers)
- Decrease All Shopping: Decrease in-store and online shopping (23 percent of consumers)
- Increase All Shopping: Increase in-store and online shopping (17 percent of consumers)
The biggest casualty is in-store shopping, with over half of respondents (54 percent) cutting back on in-person shopping visits. Brick-and-mortar warehouse store membership bucks the trend, with 35 percent of respondents saying they’ve added memberships that grant them access to bulk or exclusive pricing, whether in-store or online.
Consumers are also turning to a number of digital shopping tools to save money. The behaviors that grew the most as a result of inflation were use of digital coupon tracking, digital loyalty programs, digital price comparison, and deal-finding apps and tools. Unsurprisingly, younger consumers are more likely to have increased usage of digital cost-savings tools. However, digital-savvy baby boomers are increasing their use of some tools at rates higher than younger generations.
While the relationship between inflation and brand messaging perception can be tough to interpret, almost half (48 percent) of respondents say brand messages with promotions or coupons are more important to them now than previously. Marketers should consider that consumers may be particularly impervious to brand messaging that leans on themes other than discounts.
Parents, Especially Moms, Are Particularly Affected
Inflation is hitting parents — mothers, in particular — hard. Gartner research found that it’s mothers who still do most of the household shopping, across multiple categories. Shopping regularly for multiple people across an array of categories provides moms many more opportunities to take notice of price increases, especially as they ramped up back-to-school-related purchases.
Moms are more wary of brands’ common inflation tactics. As shown in Figure 1, when brands engage in "skimpflation" and "shrinkflation," 86 percent of moms move into consideration mode (64 percent say they would prioritize purchasing from and 22 percent say they would consider purchasing from brands that don’t use these tactics). Dads, however, are much more likely to say they’ll either stick with or dump a brand, no consideration needed.
Figure 1. Most Parents Likely to Drop Brands Who Engage in Skimpflation/Shrinkflation, But Dads are More Extreme
What this means for retailers and marketers alike: Dad’s gonna do what dad is gonna do. Let him. Mom is the consumer who needs to hear from your brand about why you’re taking the steps you are. And since she’s the consumer most likely deciding what to buy, all the more reason to make her a priority.
How Should Retailers Respond?
In the face of economic headwinds and in the midst of the holiday shopping season, marketers must be quick to leverage consumers’ changing habits and preferences. Specifically, take the following actions:
- Redirect to online ... again. It’s time for retailers to revisit aspects of their pandemic-era playbooks built when online channels became dominant by necessity. For example, many retailers sell excess inventory outside of store and brand premises so as not to dilute their brand and pricing strategy. Consider selling this inventory primarily online, since this is where consumers have shifted their attention.
- Bring pricing tools in-house. Consumers are more likely to choose digital price research tools that save them the most money and are easiest to use. Build some of these functions into brand sites and apps, whether through licensing or homegrown alternatives. Walmart+ members, for example, recently gained access to a new cashback rewards program powered by third-party platform Ibotta, in addition to digital coupon clipping features.
- If you can’t message on price, try quality. Not all brands and retailers will be able to compete on price. When brands raise prices, recent conventional wisdom has been to transparently address with consumers the economic factors that led to the increase. However, brand messaging “acknowledging the economy” isn't particularly important to consumers right now — at least not compared to messaging about discounts. Higher-end brands may opt instead to lean on positioning and messaging tied to the quality, longevity and improvements to sourced ingredients and materials.