Did you know that only 16% of consumers increased their spending last quarter? That’s the lowest it’s been in 3 years! As we head into the fall and this trend continues, it poses a significant challenge—and opportunity—for businesses.
Recent data paints a pretty clear picture:
- 79% of consumers say rising inflation has affected their spending (Jungle Scout)
- 63% on consumers reduced their spending on essentials due to high interest rates (Morning Consult)
- Millennials reduced average recreation spending by nearly $80 in June 2024 (Morning Consult)
- Meanwhile, home-centric purchases are rising: Arts & Crafts (+27%), Pet Supplies (+20%) (Jungle Scout)
What does this mean? Consumers are feeling the impact of higher costs, instead focusing their time to be at home rather than out on vacations or even going to concerts or movies. Persistent inflation concerns, high interest rates, and economic uncertainty have 51% of consumers expecting economic decline in the next year (Bank of Canada).
So what do we do? This isn’t a trend that’s going away anytime soon so it’s important to look at both short-term and long-term strategies in how to address this shift in spending behaviours:
- Personalization at Scale: Use AI-driven analytics to tailor offers. With 70% of consumers prioritizing lowest-priced products, relevance is key to keep them purchasing your products.
- Smart Bundling: Combine essentials with discretionary items. This can offset declines in non-essential categories.
- Rewarding Loyalty: Consider “price-lock guarantees” for loyal customers, providing stability in uncertain times.
- Data-Driven Innovation: Invest in systems that provide real-time consumer insights, enabling faster adaptation to trends as they evolve.
- Purpose-Aligned Products: Develop offerings that resonate with current consumer values, focusing on essential and home-enhancing categories.
The bottom line? We’re navigating uncertain waters, but uncertainty breeds opportunity. By aligning your strategies with evolving consumer needs, you will be able to adapt to this trend and come through it better than your competition.
As we approach the fall season, ask yourself: How can your business turn this challenge into your next big opportunity?