Spotlight on consumer buying behaviour in 2022

TRENDS & INSIGHTS

MARKET INTELLIGENCE

Spotlight on… Consumer buying behaviour

With consumers beginning to feel the impact of inflation, we look at how spending patterns may change in the face of rising living costs – and what that means for businesses.

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Executive summary

Rising inflation is being felt by consumers around the world. Two thirds have noticed an impact already and more than half have seen living costs increase in the last six months.

Consumers are noticing price increases across multiple categories – from home energy to apparel. But it’s the rise in grocery prices that are of most concern.

Pay close attention to consumer behaviour in your category to determine the best course of action. Consider ways you could stay competitive, such as tweaking your marketing to enhancing your customer service.

The Covid-19 pandemic brought about some seismic shifts in consumer buying behaviours. Now those new practices are evolving again as fresh challenges – such as inflation and a rising cost of living – impact the way people are spending and the affect that has on businesses.

Two thirds (67%) of consumers globally say inflation has had a moderate or dramatic impact on them.¹ Similarly, research by PwC found that increases to grocery prices are a top concern for 65% of consumers when shopping in person.²

Here, we’ll take a look at the latest figures on consumer behaviour, and find out what it could mean for businesses.

Consumer sentiment: In numbers

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Proportion of consumers who say inflation has had a moderate or dramatic impact on them¹

Proportion of consumers who say their cost of living has increased in the last six months¹

According to McKinsey research of consumers in France, Germany, Italy, Spain and the UK, price increases have been felt in:³

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Grocery

94%

Petrol/diesel

93%

Home energy

91%

Eating out

80%

Cleaning and personal care products

75%

Apparel and footwear

64%

(By percentage of customers)

Proportion of consumers who say rising grocery prices are a top concern when shopping in store²

Proportion of consumers who say rising grocery prices are a top concern when shopping online²

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56%

of consumers are spending less compared to two years ago…

…while

29%

of consumers are spending more¹

Consumers are most price conscious about:¹

Food and groceries

59%

Utilities

56%

Transport

49%

Housing

44%

Clothing

40%

(By percentage of customers)

Three more things to consider

Inflation can have a complex impact on consumer spending

While many consumers will feel the effect of inflation on their finances in the coming months, how they respond to rising costs will vary depending on a host of factors. To develop a strategy, take a close look at the categories you operate in and your products’ positions in the market. Could you sell in larger, more economical sizes, or could you offer smaller quantities or even a cheaper product? These are all alternatives that, experts say, consumers may be exploring in order to cut back.⁴

Significant, discretionary purchases are unlikely to disappear

Consumer purchasing decisions are often emotional as well as rational.⁴ Even in tough times, people typically try to make room for discretionary purchases. So far, purchases of lifestyle products such as jewellery, handbags and headphones are slightly down, year-on-year, but they haven’t ceased altogether.⁵ To capture more pressurised spending, businesses may need to work harder on messaging and positioning to convince consumers to buy. Consider speaking to some of your customers to get a sense of their attitudes to their discretionary spending; your findings could help guide your marketing.

Look beyond price cuts to stay competitive

Consumers may well look for ways to cut back in some areas, however in others, they may be inclined – or required – to hold on for as long as possible before reducing their spending. As such, businesses could put themselves in a stronger position by looking for ways to add value. Lowering prices may not be an option for your business, but consider things like elevating your customer service or, in e-commerce, your delivery and returns options, which could improve your customers’ experience. Alternatively, look for add-ons that could offer additional value.⁵

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