consumer trends: the numbers look good, but frustration is rising with prices & inflation
What you’ll learn:
- Why consumers are complaining and buying anyway (full credit to Axios for the header)
- Why retail is not getting any cheaper to operate in 2021, and how consumers may tolerate it for just a big longer
Verde Consumer Behavior Report - July 21, 2021
This is Why Consumer Behavior Trends Should be Mapped With an Etch-a-Sketch
Consumers are not happy about inflation. So purchasing is slowing, right? Nope. Not at all. Axios shares that a net 33% of consumers feel it’s a bad time to buy homes, cars, and durable goods. Incidentally, that’s an all-time record in consumer sentiment (among the 61 years of available data).
Expanding on that, the University of Michigan consumer sentiment report (July 2021) found:
Consumers are worried about inflation for now, for one year out, and for five years out.
Consumers are more frustrated than ever about rising home, car, and appliance prices.
71% of people believe home prices are too high and it’s a bad time to buy.
So why isn’t spending slowing down? Why are homes selling faster and for higher prices? Economists say it’s due to pandemic-inspired savings and pent-up demand to spend.
Our mini take: Pure data is great, but never forget it’s being applied to human behavior. This article demonstrates why subjective analysis needs to go hand-in-hand with data. It’s crucial to understanding the nuances of consumer behavior. We expand on this below.
Nevertheless, Prices Persist Upward
According to an article on CNBC.com, Salesforce predicts that prices on consumer goods will continue to rise, and consumers will tolerate the extra spend at least through the end of the year.
It’s expected that between increased costs in shipping and logistics, labor and wages, and supply chain expenses overall, the cost of business for U.S. retailers will be up $223 billion (62%) through the end of 2021, compared to the same period last year. Most retailers will pass the increases along to their consumers.
After tracking the transactions of over 1 billion shoppers both online and at brick-and-mortar stores for a quarter, Salesforce concludes that consumers have been willing to tolerate the higher prices. But as alluded to in the story above, there will be a breaking point. That leaves retailers in a predicament.
“Retailers are trying to figure out at what point does this inflation become an issue or demand destructive? No one knows the answer to that. It’s a moving risk.”
We don’t know the answer either. Though Salesforce seems to be tilting toward pushing volume to create a bigger buffer from inflation. Ironically, their spotlight solution is pretty low-tech. Salesforce is still big on the last mile trends of buy online/pick up in-store, drive-thru, and curbside delivery.
Consumers continue to appreciate the safety of those services and moreover, they love the convenience. In the five days leading up to Christmas 2020, retailers that didn’t provide more consumer-friendly last-mile options saw a 34% increase in sales (year over over). However, retailers that did offer those services experienced a 54% increase in the same time frame.
Our take: Most growth strategies focus on increasing market share because developing new markets is a far more complex and hard goal to attain. At the risk of sounding jaded, the pandemic developed a whole new market of outdoor enthusiasts: those that wouldn’t have participated if there were other options.
A Time For Listening & Retention Tactics
As inflation rises, savings diminish, other leisure time activities reopen, and the pandemic (hopefully) wanes, have you done enough to turn pandemic customers into lifelong customers?
This week’s stories say that consumers are appalled by prices and they’re buying anyway. But they also subtly prove the point that data never tells the full story. When we’re talking about consumers, we’re talking about nuanced humans. Data shapes what we know, but we need subjective analysis to bring it to life.
Manufacturers and retailers should be listening (hard!!) to their customers right now. Are they continuing to value their outdoor experiences? Will elevated price structures become a deterrent? Have they been appropriately welcomed into their new community? Do they understand a path for learning, improvement, and gear upgrades in their new passion?
In other words, the data continues to look good. People are buying into the active outdoor markets. But if we’re not attentive to the subjective nuances, the full story could eventually just be labeled a pandemic blip.
It’s a good time to double down in content, social media, safe events, and good old-fashioned conversation. It’s been about a year since sales shot up across many outdoor sectors. Have you run an email campaign asking if it’s time for a tune-up, an upgrade, a skills development class, or a store happy hour meet-and-greet?
Check-in with your core customers and the new wave of pandemic-inspired customers to see what they need and how you can inspire them, help them or support them.
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