When consumers have strong and consistent spending habits, this contributes to increasing demand for goods and services, which drives the economy towards growth, while unbalanced spending habits can lead to fluctuations in demand for goods and services, which may cause a state of instability that negatively affects economic growth in general.
Therefore, understanding consumer spending habits can help companies better define their marketing strategies. When companies are able to understand what drives consumers to buy and spend, they can introduce products that meet the needs of the market, which helps them increase their opportunities for growth and profitability, which positively reflects on the economy.
According to a report prepared by CNBC and reported by the Sky News Arabia Economy website, the latest research conducted by Impact regarding consumer trends in 2024 showed that shoppers are adjusting their purchasing habits. They are now spending their money more tactically than ever before, but at the same time, they are not afraid to overspend if they get the right incentive, so brands must be more strategic to influence shoppers’ decisions.
Impact research results show that new consumer buying habits could represent an unexpected opportunity for retailers, especially if they look at the five key elements that will control the market in 2024, which are as follows:
Different shopping behaviors
With shoppers willing to spend more money on necessities like groceries and gas due to inflation, many people have had to change their shopping behaviors, cutting back on non-essentials and abandoning their usual purchasing habits.
Data in the US shows that consumers made 7% fewer purchases in 2023 than before, so brands will have to work harder to convince shoppers that the products they offer are worth paying for.
Offering consumers multiple payment methods can also help boost their spending, with data showing that buy now, pay later usage increased by 42 percent year-on-year in 2023, expanding shoppers’ purchasing power.
Although shoppers are cutting back on spending and purchasing less, global price inflation has pushed up the value of the shopping cart, prompting many shoppers to cut costs and save money by switching to lower-priced brands, while others have switched to smaller package sizes of the brands they are used to buying because they are cheaper.
Monitor deals
Statistics reveal that consumers have begun to adopt the “deal-hunting” strategy, available through various commercial windows, to choose a specific product and add it to their wish list, and then wait for the offers and deals to include it.
It also became clear that a large segment of consumers are now waiting for seasons that witness abundant sales, such as Christmas, New Year’s, Black Friday, and Mother’s and Father’s Day, to make huge purchases and benefit from the best offers during those periods.
With this change in shopping behavior, it becomes important for brands to grab the consumer’s attention by approaching them with strong offers that encourage them to buy.
Rising prices haven’t stopped some shoppers from wanting to spend on selective purchases, such as luxury groceries or travel. While overall consumer spending has declined, some categories of purchases have seen unexpected increases in spending, as companies have been able to inspire shoppers who like to show off their purchases to make unnecessary purchases.
For example, consumer spending on arts and entertainment in America increased by 36 percent, while brands offering products for home, garden, sports, outdoor and fitness saw sales increase by 6 percent.
This shows how brands were able to inspire shoppers to splurge on unnecessary items when they saw the right opportunity and offer.
Advertising Spending
As buyer behaviors change, companies are more willing to spend on advertising to increase brand awareness, boost purchase intent and motivate even the most selective shoppers to make a purchase.
Brands’ increased ad spend helps increase ROI and build trust with potential new customers, and with inflation expected to decline and consumer spending likely to increase in the future, companies can ensure that their brand remains top of mind for shoppers when they are ready to buy.
University professor and researcher in marketing and political marketing, Walid Abu Khalil, said in an interview with the “Sky News Arabia Economy” website that the price hike in 2024 greatly affects consumers’ shopping behavior, which calls for a re-evaluation of their lifestyles and spending habits, noting that recent studies highlight these changes that are consistent with the results of the research published by Impact.com. Therefore, in order for brands to maintain their continuity and remain at the forefront of consumer preferences in 2024, they must quickly adapt to changes in consumer behavior, by focusing on several strategies, such as enhancing the value of the products they offer, and taking advantage of technology and digital advertising, to increase brand awareness and attract a wider audience.
Abu Khalil explained that consumers are now prioritizing essential purchases due to the rising cost of living, which leads to reducing spending on non-essential goods and directing resources towards necessities such as food and fuel. Financial pressures are also pushing many to look for more economical alternatives, which leads to a shift in brand loyalty. For example, in Egypt, inflation has led to a shift towards local brands that offer lower prices.
Abu Khalil stressed that consumers are already adopting a more strategic approach to their spending, planning purchases to coincide with sales and discounts, especially during events such as Black Friday and holiday seasons, while despite the economic challenges, some consumers continue to allocate resources to purchasing luxury goods and selective purchases as a means of self-expression and enjoyment.
Joe Melhem, a trade and marketing expert, told Sky News Arabia Economy that consumers around the world are feeling pressure and anxiety about inflation, which has caused widespread shifts in the global consumer landscape and forced manufacturers and retailers to stay on top of understanding market trends. Merchants want, more than ever, to understand where and how people shop to be in the best position to succeed.
With the headwinds of the economy, consumers around the world are increasingly shopping at discount stores, and it has become clear that they are no longer concerned with the principle of brand loyalty, which they have been known for for a long time, Melhem reveals.
Consumers are becoming more inclined to switch to cheaper brands, he says, and many emerging brands are exploiting this, which also explains the overwhelming success of Chinese fast-fashion brand SHEIN, which has taken the market by storm thanks to its low prices.
Melhem believes that consumers today are applying the principle of defying expectations, by behaving in unconventional ways to achieve the principle of “affordable luxury”. For example, they are ready to give up many old purchasing habits, in order not to lose the battle against inflation. We see that many of them have begun to economize in their way of life, but in return they do not give up things that they consider essential, even though they are not so from a scientific point of view, such as traveling for recreation once a year. He points out that consumers consider achieving these habits to be essential and irreversible.
Melhem explains that the love of showing off in purchasing operations is an old social phenomenon that cannot disappear, as there is a group of people who consider that this behavior highlights their financial and social success, and this is what companies are well aware of and exploit to increase their sales volume, especially among consumers in China.
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