With consistent warnings of a looming recession and inflation continuing to affect the prices of items that include everything from rent to groceries, things are no longer an oversight, but something everyone is paying attention to.
With economic changes occurring on an almost daily basis, consumers are reacting. With the cost of goods and services reaching all-time highs, will spending habits change in the near future? For business decision-makers, it’s time to pay attention and make sure your brand’s prepared.
Spending’s Taking a Turn
Data from HubSpot and other surveys indicate that the potential of a recession has impacted spending habits across demographics. Continuous warnings of a US recession show that 30% of respondents during the summer of 2022 purchased less and paid more attention to how they spent money as compared to previous months.
Moving into the Winter of 2022, 30% of respondents said they were making little to no purchases due to warnings of a recession, with 24% being more conscientious about spending money than in previous months. Respondents whose spending hasn’t been impacted by the news also dropped from 17% to 13%.
What does this mean? For brand leaders or marketers challenged with getting goods off the shelves, it’s time to get creative and stay connected to those who are tightening their wallets, but may still purchase items within their new budget or have a decent return on investment. Now is the time to consider discounts, sales, deals, or freemium marketing to provide experiences these consumers can’t resist.
Breaking Through New Budgets
Brands must take into account the significant shift in consumer spending that may occur during the first three months of a recession, or as the cost of goods and services continues to rise. 64% of consumers polled during the summer said they would decrease or continue to decrease their home budget. Interestingly, this percentage dropped to 57% with 27% saying their budget will remain the same, and only 15% saying it would increase.
Brands must consider the items that are key to people maintaining some semblance of their lifestyles. While one set of surveys should not be the sole basis for completely revamping your entire marketing strategy, necessities should be the current focus instead of higher-priced or luxury items.
Essentials take Priority
There have been many reasons for consumers to curb spending in recent years, including the pandemic, concerns about recessions, and changes in quality of life. Consumers surveyed in the summer and winter indicate that basic necessities such as groceries needed to make meals come first, followed by rent, mortgages, and housing bills. Essential personal care products came in third, with healthcare and medication last in line.
While entertainment, shopping, and other non-essential items and services are not completely off the list, people are investing more in digital or online entertainment rather than going out. However, 9% of those surveyed still go out to bars and restaurants, and 16% invest in clothing and apparel.
It is time for marketers to make meaningful connections with customers to enhance their customer retention processes. This means paying attention to what consumers are purchasing and how they purchase. Recessions create bargain hunters, so it is crucial to capitalize on these consumers. Instead of pushing them to off-brands, create opportunities where the brands they love are comparable in pricing. This reinforces brand loyalty while catering to their needs.
How quickly will things get back to normal? Who really knows? This is a great opportunity for marketers to reevaluate their strategies and focus on the tried-and-true products consumers know and love. Ramp up content marketing, have tiered options, and stay the course. Set realistic goals, invest in what’s working well, pay attention to the competition, help consumers save money, and focus on new streams of profitability.