The pandemic, economic volatility, the war in Ukraine, and continuing supply chain disruptions, have changed everything. We’re spending about 15% of our time differently than before. Among the things that have changed are our consumer habits. While life seems “normal” on many levels, things have fundamentally changed underneath the surface. Over 95% of consumers say their purchasing has changed in some way over the past 3 years.
Successful companies have navigated this unprecedented period by being agile and making tactical changes to navigate the rapidly evolving period over the past three years. Future success will likely require a balance between navigating declining consumption for many products & services in a challenging financial environment with an intermediate opportunity to align with consumers through a reimagined value proposition for 2023-2025.
Creo Advisors has some new consumer research. Key takeaways include:
Disruption and Broader Consumer Change
- People anticipate disruption as part of ‘normal’ life. While they expect slightly less trouble over the next 3 years, vs. the last 3 (rated 53 vs. 64, respectively, on a scale of 1 to 100), people still anticipate meaningful disruption. They are growing more accustomed to unanticipated shocks and surprises in an era that may become known as “The Great Disruption.”
- We are spending our time differently. This differs significantly by person, but we are spending 15% of our time differently than in 2019. We predict this will continue through 2025.
- We’ve become more ‘self-centric.’ Over 54% of consumers are self-reporting they thought of themselves more than others over the past 3 years. Simultaneously, they believe more than 75% of others think of themselves first more during the same period.
- Our values have evolved. Over 90% of those surveyed expressed a change in values, with values generally becoming more important. They elevate honesty and trustworthiness most, followed by kindness and self-reliance. Selflessness and humility appear to be less important.
Looking Ahead to 2023
- Shift in spending: Consumers highlight meaningful changes in spending for housing, food, and other non-discretionary items. These changes equate to shifts of more than $1 trillion of spend across all categories.
- The service gap: Consumers have higher expectations for service in 2023. Companies will struggle to meet these higher expectations in a tight labor market and through newly desired customer experiences.
- Evolving segmentation: Behavioral, spend, time allocation, and value changes exist across customer segments. Not all have the same view for the year. Interest rates will play a substantial role and affect spending.
- Broader outlook: Consumers are somewhat more optimistic about their financial situation 12 months from now and have a modestly ‘comfortable’ outlook by year end.
Last minute thoughts on Holiday 2022
- Frugal spending. Inflation concerns loom large, and many indicated they plan to tighten their spending. 60% of shoppers surveyed anticipate reducing their budget this holiday.
- Consumers are shopping later than last year. Less than 40% of consumers plan to be 50% done with their Holiday shopping by December 1st.
- Finish strong. Near-term, these factors will require retailers to be agile with last-minute changes to marketing, promotions, and labor to maximize Holiday 2022.
With consumers feeling less financially stable and more anxious and cautious going into 2023, Creo Advisors believes companies need to take a fresh look at their value proposition and how to serve consumers best.
Additionally, businesses need to act now to make the appropriate investments to capitalize on market share opportunities in the latter half of 2023.