American consumers are right to feel like they can’t catch a break right now. Just as people were eagerly starting to put a trying pandemic behind them, another formidable beast entered the room: inflation. U.S. inflation shot up to a 40-year high of 7% before showing signs of slowing down in April.
While it’s possible that price pressures have peaked, that will be of little comfort to American consumers as they head into a third straight summer defined by financial hazards and uncertainty. Choose your poison: oil prices impacted by Russia’s war in Ukraine, endless supply chain issues complicated by on-again off-again lockdowns across the globe, the list goes on. A recent interest rate hike by the Fed should help, but recovery takes time.
People find themselves having to adjust yet again, altering both shopping habits and mindsets to accommodate steadily climbing prices. For many consumers, this means tighter budgets for upcoming spending events and making tough choices on non-essential expenditures.
As shoppers place more emphasis on price, we are seeing inevitable erosion around brand loyalty. Brand names still talk,but deals shout “Hey, over here!” to consumers pinching every penny. With inflation top of mind for so many, loyalty can seem like a tough ask, but a clever, balanced approach to offering discounts and value can still help brands find a sweet spot.
An April survey of more than 1,100 U.S. adults conducted by Ziff Media Group sheds light on how brands and the people who love them are shifting course as we enter the summer months.
How Inflation is Impacting Consumers
Heading into summer, families are seeking to budget in a way that won’t leave them at a disadvantage for the rest of the year. Inflation makes that trick harder to pull off. Sizable price increases across the board continue to put the squeeze on consumers.
Some 61% (up from 59% in Q1) of the people surveyed by Ziff Media Group said they are likely to reduce their overall spending this summer as a direct result of inflation. Essential goods continue to be hit the hardest by price hikes. Fluctuations in gas and grocery prices are affecting consumers the most, and 70% cited one of those two items when asked what price they would lock in if given the chance. Higher-ticket items like houses (21%) and new vehicles (19%) also ranked.
As consumers focus in on where to make cuts, they seem to be landing on five primary areas:
- Dining out (60%)
- Personal shopping (50%)
- Driving/gas purchases (46%)
- Groceries (46%)
- Entertainment (45%)
Two final data points highlight the pinch and how it’s making people feel. First, 70% of respondents said they feel the need to budget more when shopping due to inflation. And 62% believe that saving money is harder now than it was for their parents’ generation.
How Brands can Deliver
ZMG survey data reveals in no uncertain terms that shoppers are foregrounding price in their thinking while relegating brand loyalties to the back seat. Depending on the way your brand plays it, this can either be a difficult challenge or a big opportunity. What do we mean? Well, let’s go back to what consumers are telling us.
First, about deals.
- 72% of respondents told us they like to shop around before making a purchase
- 66% consider coupons or promotions to be very or somewhat influential when shopping, while 60% said the same about cash back offers
- 61% indicated that they will not complete a purchase without at least looking for a deal or discount first
- 48% said they will typically hold off on purchasing an item until they have a promotion secured
And what about loyalty?
- 63% of the people say price is more important to them than what brand they choose
- 58% tell us they will gladly switch brands to take advantage of a coupon
Again, these are pretty clear messages from your customers to you. As much as a person may love your brand, they can easily be tempted away by a better deal elsewhere. To overcome this, brands can utilize a number of resources to help current customers stay on board and potential new ones discover your products.
One such opportunity is Cash Back programs, popular with shoppers and brands alike. Consumers love it because they get cash back from hundreds of stores and brands. They can activate a Cash Back offer and combine it with coupon codes to earn rewards and maximize their savings. Brands love it because it helps them capture consumer attention early in the season and drive repeat purchases later on. It’s worth noting that, to date, RetailMeNot has paid its Cash Back members $40 million and still counting.
To get through the coming months, shoppers and brands will need to rely on each other. You and your team will want to revisit your brand strategy to ensure you are well positioned. Maintaining the standards your brand has set is always key but, by putting your stressed-out customers first in their moment of both difficulty and stretched loyalties, you can emerge stronger than ever.
Whitney King is the Director of Partner Marketing at Ziff Media Group where she oversees commerce insights and thought leadership, partner and industry events, and branded content for its portfolio of publishing and shopping brands, including Mashable, RetailMeNot and PCMag. King brings more than 10 years of experience to the retail space with prior roles leading creative and branding initiatives for brands such as Walmart, Dell, P&G, Best Buy and more.