Consumer spending habits are in an interesting place, a point of which businesses should be cognizant. For one, consumers are ready to begin spending again. As anxiety about the COVID pandemic has waned in recent months in the US at least, excitement about travel—especially as the summer months approach—is certainly in the conversation. People around the world are also anticipating returning to normalcy; suffice it to say, they are longing for it, and they are cautiously optimistic about their own abilities to spend.
However, consumers are also feeling increasingly strained by worries about inflation and wage stagnation. What do we glean from these recent trends, and what does this mean for the future of spending, both in the short and long term?
The Future of Consumer Spending Habits
Although the future of consumer spending portends dramatic changes, all indicators point to former general trends returning to normalcy. According to a recent survey conducted by McKinsey, “Convenience and value have been the main drivers of shopping behavior change; however, quality and seeking brands that match with their values also inspire change for about 40 percent of younger consumers.” There are a few tactics that organizations should consider when considering these attitudes.
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Among these, businesses must be even more present, especially when it comes to providing accessible products and services to their customers, and at reasonable prices. There is no shortage of competition in today’s market when the market provides affordable solutions for most consumer needs. So, the solutions they will demand in the post-pandemic world must be attractive and relatively cheap.
But consumers are also increasingly conscious of the ethics of business operations. They want to know that their investments are going to worthy and ethical causes. All indicators suggest that the future of spending will be driven by social responsibility. Organizations must, therefore, remain aware that their goals, vision, and behavior align closely with these perceptions. People want to feel that their money is going to a good place.
Short-Term Anxiety, Long-Term Optimism
Complicating matters in the short term, Deloitte suggests that “anxiety about finances and jobs has risen.” Just as businesses are struggling to be able to offer increased wages (and this due from a variety of obstacles), many consumers are having trouble making ends meet. Research suggests that these fears and discomforts will be mitigated, although how long the recovery will take is anyone’s guess.
Today’s spending conflicts are not the same as the past, despite the similarities. According to Brookings, “the exceptional nature of the shock provides reasons to be optimistic for a fast rebound in consumer spending once the pandemic is over. Unlike previous recessions, this one involves no consumer debt overhang, bursting asset price bubbles, or long-term business cycle fluctuations.” Even if these economic tremors persist, there is no reason to suggest they will lead to a long-term collapse. On the contrary, consumer habits are much more likely to return to normal sooner rather than later.
Now is not the time to panic about the present concerns about economic growth and the future of consumer spending. Rather, conditions have opened the door for tremendous growth opportunities that we all can incorporate to encourage our customers.
How are you working to stimulate growth in the future of consumer spending?