Deloitte: Price isn’t everything as consumers shift spending
Brands that offer only low prices could stand to lose out to competitors who offer more, as economic headwinds continue to influence consumer behavior.
That’s according to a new report from Deloitte, which finds consumers are gravitating toward brands that offer “more value for the price.” The study revealed that while value and price are linked, between 10% to 40% of consumer perceptions of a brand's value stem from factors other than price.
“Brands that provide extra value have higher purchase intent and are growing consumer share over time,” according to the Deloitte report. The study, “The Value-Seeking Consumer: Competitors Could Lose out to Brands Offering More than Low Prices,” underscores how despite a decline in inflation, consumers’ perceptions of price and value haven't recovered, leading to more widespread value-conscious behavior.
Based on Deloitte’s ConsumerSignals, four-in-10 Americans surveyed were identified as value seekers. Of these consumers, almost two-thirds are cooking more meals at home (65%), over half are purchasing cheaper ingredients from the grocery store (53%), and many are switching to store brands/private labels (59%), which is about 10 times the rate of non-value-seekers, respectively. If they go to a restaurant, 40% choose one with a deal/promotion.
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The report found that value-seeking has the greatest effect on higher-income. Although nearly four-in-10 value-seeking consumers surveyed are from lower-income, middle-aged households who look for value out of necessity, 23% of consumers earning $200K or more are value seekers and this group has the most extreme behavior changes. Higher-income households also plan to spend 50-60% less in many discretionary categories relative to their peers.
Other key findings from the Deloitte report are below.
•Discretionary spending shrinks: Value-seekers surveyed intend to spend 40% to 50% less on discretionary categories such as personal care, household goods, home furnishings, and entertainment, while allocating a greater percentage of their budget to essentials like housing and transportation.
•All generations engage in value-seeking behaviors: Nearly half (49%) of Gen X and (43%) of boomers engage in value-seeking behaviors, challenging the notion that financial pressures mainly drive younger generations (40% of millennials and 44% of Gen Z) to seek value.
•It’s Not About Cheap—It’s About Worth: Consumers define value far beyond just a price tag. Up to 40% of what drives perceived value stems from non-price factors like quality, trust, and experience. This breaks the myth that value-seeking equals “low-cost” — instead, it’s about feeling that a purchase is worth it.
Other than price, quality and attitude are the top value drivers for “more value for the price” (MVP) brands within the grocery, hotel and restaurant sectors. Quality and reliability are tied at the top for automotive brands, while delivery speed is critical among apparel retailers.
“Consumers are more discerning than ever, weighing the value they receive with their purchases,” said Mike Daher, vice chair and U.S. consumer industry leader, Deloitte. “As economic uncertainty lingers, consumers across demographics actively seek brands that deliver value, whether through quality, trust, friendly attitudes, or a combination thereof. No matter the industry sector, MVP brands that get pricing right and boost consumer perceptions of their value will be well positioned to attract consumers, increase their margins, and build long-term loyalty.”
