Our just-released How America Shops® survey synthesizes what shoppers told us about how they are responding to rising prices, and it’s more positive than you might think. Read on to learn where they are trading down on brands, the stores they are willing to sacrifice and the savvy ways they are holding off across categories
Brands and Retailers: Expect a Long-Term Spending Adjustment
Yes, higher prices on everything from carryout tacos to walking shoes, gas in the car to oil in the burner, have gotten shoppers’ attention. But not all: Here’s what shoppers told us in March.
While it’s encouraging that 15% of shoppers have yet to changed their spending routines because of rising prices, it’s what the other 85% are thinking – and how they are responding – that should give retailers and brands pause:
- One-third have had to cut back in order to pay for the basics and their bills – a figure that is unlikely to be offset by lower unemployment.
- More than half of all shoppers are now more careful about how they spend, meaning they second-guess habitual purchases and impulse buys.
- The majority of people think this is just the beginning of rising prices and that they will continue to climb.
We think shoppers are right. Even if prices do not continue to rise, they are unlikely to go down, creating what will be a long-term adjustment in buying behavior. How some of these shoppers have already changed their approaches to spending has us thinking …
New Strategy: Deplete, then Replace
Like all of us, shoppers prioritize, so the first purchases to go when prices got too high were the discretionary ones, namely entertainment and dining out. Unfortunately, these are the areas they had just begun to enjoy again, post-pandemic.
But other purchase categories are following, closely. During the pandemic shoppers had stocked up. Now they can work down those inventories and postpone buying. Shoppers are in fact cutting back on retail categories we might have once considered essential – or are finding clever ways to hold off on replenishment. Here’s a breakdown of our research highlights:
- A high percentage of shoppers have put off buying what they feel are less essential: home fragrances, clothing and cosmetics, which is predictable.
- Personal care categories are lower on the list because shoppers often have “at-home inventory” to use up. They will wait for a sale on their favorite brands rather than compromise.
- When it comes to everyday basics like over-the-counter and prescription medications, it is surprising how many shoppers will cut or skip doses to save.
- Some retailers are winning shoppers, while others are losing them. For example, while one retail powerhouse has seen a gain, its leading competitor has seen one-third of its shoppers come less often. Sometimes it’s about avoiding temptation!
Cutting Spending Doesn’t Mean Doing Without
Due to all of those stock-up trips shoppers took during pandemic, their homes are now mini warehouses. This will make year-over-year sales figures especially hard to match for many retailers and brands.
Here’s what retailers and brands can do:
- Strategically place displays of lower-priced items in the categories shoppers are holding off on. Think inexpensive “basics” shirts or “$3 and less” end-caps. Some of these purchases could encourage other buys.
- Review the categories we list that show where shoppers are more willing to trade down to store brands from big brands, and where they will not. Target your promotions accordingly.
- Rethink the value of economy sizes as more people have less cash to spend, even if it means saving on ounces.
WSL’s How America Shops® research has tracked the growing acceptance of small formats that offer value – think the dollar stores, Aldi, Lidl, Trader Joe’s. Big box stores have been challenged by how quick and easy these small formats are to shop. Now the appeal of lower prices adds to the challenge.
To sum it up, shoppers aren’t walking away from spending; they’re just being more thoughtful about how they use what they have. Every category is being purchased differently than it was a year ago, so scavenge for the opportunities within each – and expect a prolonged adjustment in buying behaviors.
And let shoppers know: They aren’t alone in dealing with rising prices.
Looking for a category important to your company? You can learn how shoppers are cutting their spending in other categories, and at which retailers. Click here for the full list, in our report and for more information on how to buy.