The waves of disruption that most affect consumer spending

Inflation, omnichannel presence and ESG are driving shopping trends.

avery-evans-RJQE64NmC_o-unsplashFrom toilet paper panic to endless hours spent at home, the pandemic changed consumer spending habits and forced retailers to catch up. A new way forward has emerged, and while consumers may have shown patience over two years ago during the onset of the pandemic, a June 2022 Global Consumer Insights Pulse Survey has determined that their expectations have evolved, and choice, quality and service rank high on their list of priorities.

But as waves of disruption continue to pummel retailers in the form of war, inflation, supply chain shortages, social and environmental issues, digital experience expectations and a looming recession, which factors affect consumer behaviour the most, and how can businesses adapt? Here’s how consumers want to shop, even in the face of uncertainty.

A hybrid shopping method

No surprises here: Globally, 60% of respondents reported that their online shopping increased during the pandemic, with roughly half saying they plan to increase even more. A third of survey participants reported that they expect to increase their patronage to physical stores.

When asked which issues caused the greatest impact on shopping experiences online and in-store, the top two answers were the same for both: rising costs of groceries and inability to purchase a product due to it being out of stock. Next, online, 42% of respondents remarked that a product taking longer to be delivered than expected was a barrier, and in-store, long lines and busy locations deterred consumers.

According to the survey, with over 40% of consumers working under a hybrid model, and one in ten continuing to work from home, these transitory models have been driving fluidity in shopping habits. Consumers are more likely to jump between purchasing methods in an effort to find the channel that works best for them.

Retailer tip: Embrace the flexibility. Local retailers and those that provide quality domestic products can benefit by offering streamlined pickup and delivery services.

Adapting to VR

One third of respondents said they used virtual reality in the last six months, and for more than just playing games. Among them, their actions included joining a virtual world to experience the retail environment, and purchasing digital products after testing them or browsing stores in VR. Of the 32% of consumers who used VR, 19% said this method led them to purchase luxury goods.

As disruptions mount, a quality omnichannel experience is a way to bypass the barriers. Consumers armed with technology have the power to use comparison sites to determine product availability and price compare to suit their needs. According to the survey, 81% of respondents answered that they had shopped across at least three or four channels over the past six months – more than half shopping daily or weekly.

Retailer tip: Trust is integral in the omnichannel world. Investments should be made in data analytics to better understand customers and their habits, but with over half the respondents signifying that data privacy plays into their level of brand trust, honesty and data protection are not to be overlooked.

What we’re buying now

A whopping 75% of respondents said they plan to sustain or increase current levels of spending across most categories over the next six months. While participants understood that inflation, particularly the cost of groceries, would lead to increased bills, a balance emerged as consumers said they were likely to cut back on non-essential items such as fashion, health and beauty and consumer electronics.

Comparison shopping is playing a role in consumer habits. One in four respondents said they would pay more to get the product they wanted, but just as many reported that they were more likely to go without or wait until the product became available.

Because of supply chain issues, geopolitical conflict and climate change, consumers are looking to buy locally. The survey indicated that eight in ten showed willingness to pay more for products that were produced locally or domestically. Their reasons included supporting the local economy and feeling “patriotic,” as well as supporting an internal belief that domestic products are of higher quality and would take less time to arrive.

Retailer tip: These cut-back areas are key to monitor if inflation persists and pandemic savings dwindle – especially if debt grows in order to sustain lifestyles. Economic contraction with the possibility of a recession will affect consumer behaviours, but could also alleviate some pressure on supply chains and potentially ease the rate of inflation.

Environmental, social and corporate governance (ESG) transparency

Millennials and Gen Z said they were more likely to purchase from a brand that displayed trust and advocacy when it comes to matters of ESG, and even influences the chances of them recommending the company to others. Four in ten respondents stated that ESG affects their purchasing decisions, and of these factors, environment ranked last.

Retailer tip: ESG is on a growth track as a disruptive force and a value driver, and is likely to affect how consumer products’ companies approach business, how products reach consumers and which products will be available.

Honesty appears to be the best policy here. Transparency in business practices influenced more than half of consumers purchasing decisions, with 36% of respondents saying that they valued a company that paid its fair share of taxes, and wasn’t afraid to admit to past mistakes.