Price Pressures Persist: How Retailers and Brands Can Navigate Changing Shopping Behaviors
As inflation persists, consumers are continuing to be cautious and experience stress. Financial reports from large retailers indicate a transition from discretionary spending to a focus on essential needs, an indicator of monetary strains among consumers. A New York Times article, “U.S. Consumers Are Showing Signs of Stress, Retailers Say,” notes that despite the resilience of consumer spending, recent earnings reports from retailers reveal concerning shifts in shopping behavior among U.S. consumers.
Price Pressures Persist
A recent wave of AMC Global’s ongoing consumer behavior study continued looking at the impact of price increases and persistent inflation on shopping behavior. The first wave of research looking at inflation impacts was released at the beginning of 2023, with an update this August. Despite findings in the update that consumer perception of price increases has begun to stabilize, consumers are continuing to scale back on purchases in various ways. For example, they're still using shopping strategies like opting for generic alternatives when it comes to over-the-counter medicines in order to try to save money in the face of continued higher prices. According to Alpha-Sense, “trade down — the act of buying cheaper brand goods as a way to save money — is behind almost every purchase” lately. Gathering the right shopper insights can provide valuable information to brands and suppliers on how best to place, price and promote their products in-store — and this will be especially important with continued economic concerns.
Gendered Wallet Worries
Interestingly, there's a notable gender disparity in the continuing wave of financial concerns. Our study revealed that a higher percentage of women express apprehension about the state of the U.S. economy and their personal finances compared to men. Eighty-one percent of women reported being "really concerned about the U.S. economy" compared to 72 percent of men, indicating a significant gender gap in economic anxieties. Additionally, 70 percent of women admitted to being "more concerned about their finances than ever" in contrast to 58 percent of men.
This isn’t surprising, as women are more directly affected by economic downturns and inflation because they already face more challenges than men such as “the effect of caregiving responsibilities, the struggle of working long hours or multiple jobs in low-wage positions, and the dearth of economic education for women and girls,” according the The 19th, an independent newsroom focusing on gender and policy. According to Aspen Institute's Women in the Economy report, women say the American economic model just doesn't work for them.
These findings underscore the importance of delving deeper into the factors driving this financial stress among women consumers. According to Supermarket News, 78 percent of women are the primary household shopper and are making the decisions about what to buy in multiple categories. Comprehensive exploration of these attitudes and influences can help brands understand how to innovate in a way that can meet shoppers where they need to be met in today’s market.
Helping With the Challenge
So there's no doubt that people, women especially, are facing real challenges posed by rising prices. But how can retailers and brands help them navigate the impact of inflation? According to Insider Intelligence, there's “pressure on consumer packaged goods (CPG) brands and retailers to attract customers without affecting the bottom line.”
There are a variety of solutions shoppers are looking for in today’s marketplace to help with their bottom line. Retailers can consider making bulk purchasing options readily available. Our study indicates that consumers are increasingly turning to larger packs and bulk buying as a strategy to combat price hikes. Additionally, making generic and store brand alternatives easily accessible is vital, especially for products like over-the-counter medications frequently found in grocery stores, as our research underscores the growing preference for these cost-effective options. Shoppers are now purchasing products with higher price tags less frequently and actively seeking out discounts or coupons.
Retailers should take these strategies into consideration to effectively cater to today's price-conscious consumers who are grappling with the effects of inflation and better serve today's price-conscious consumers. It will continue to be very important to gain understanding of the evolving landscape of consumer behavior through ongoing research and monitoring, and then adapting and innovating to address the ever-changing needs of shoppers.
Erin Russeck is the chief research officer at AMC Global, an international custom market research firm.
Erin is known by her clients and colleagues as a passionate and effective team leader, focused on delivering creative research solutions and providing thought leadership. She thrives on staying ahead of an evolving industry by developing custom research design strategies and pushing the envelope on storytelling and data visualization. Erin has more than 20 years of experience working with insights for the consumer packaged goods (CPG) industries.