Reacting to Consumer Behavior During Times of Economic Uncertainty
If we’ve learned anything in the past few years, it’s that there will always be unpredictable external forces.
As signs of economic conditions continue to fluctuate, it’s evident that consumer behavior is changing as a result. In fact, according to a recent McKinsey U.S. Pulse Survey, the number one concern of respondents was rising prices and inflation. A Gartner survey also found that 41% of shoppers expect the economy to weaken in 2023.
So how can you prepare for these changes and take advantage of these shifts in behavior during great economic uncertainty?
As a brand, you must understand and predict how consumer behavior will shift during these periods and how you can stay ahead of any changes by adjusting your marketing strategies.
Shopping at value stores
This past year, consumers have turned towards discount and warehouse stores to get more value from their spending. Snipp Interactive Inc. found that 40% of consumers shopped more at discount stores in November 2022 as compared to the previous year. Sam’s Club reported in its 2022 third quarter earnings that membership income was up 8% with membership at an all-time high.
This trend is likely to persist in 2023 as inflation remains top of mind. To cater to value shoppers, you can track shoppers’ data at these discount and warehouse stores to measure real-time changes in spending habits and preferences. What essentials are consumers purchasing? On what are they willing to splurge? And which brands or categories are coming out on top?
It’s important to note that measuring this type of data is helpful regardless of the economic environment. This information is useful to know whether consumers are looking at circulars for the best deals during belt-tightening times or if they are searching for cool recipes because they have disposable income.
Sticking to shopping lists
When recessions loom, shoppers tend to stick with what’s on their shopping lists. They are looking for ways to save, and don’t have as much flexibility in adding extra items to their carts. In today’s digital age, this means that shoppers are building digital lists on their mobile devices. We found that 81% of consumers purchase every item on their digital lists, making these lists a good indicator of sales and shopper intent.
As a result, brands must get on consumers’ digital shopping lists to avoid brand-switching and maintain customer loyalty. Getting on digital shopping lists enables an easy way for brands to get on both digital and physical carts. Brands can promote their products directly on shopping lists to push the needle on awareness and sales. This also encourages repeat purchases, reminding shoppers about their previous purchases and making sure that your brand stays a staple in their carts.
Seeking discount or private label brands
Shoppers also look to discount or private label brands to save on costs when they are forced to reconsider their everyday spending. According to Deloitte, 65% of retail shoppers say they will trade brands if prices are too high. NielsenIQ says, “Inflation has had a noticeable impact on private labels. We see that some of the higher inflation markets are among the fastest growing in private labels as well.” CPG brands are bracing for cost-conscious consumers in 2023 and the impact this change of behavior will make on sales.
To compete, it’s important that you invest in targeted marketing efforts to keep your brand top of mind on the most impactful channels. For example, you can retarget ads to those who visited a specific webpage or run relevant ads in a highly contextual way, such as serving a pasta ad on a recipe website. A brand can further enhance these ads by making them shoppable, enabling consumers to load products to a digital cart or shopping list. This keeps price out of the consumer decision making process and can help win the purchase prior to the consumer entering the physical or digital store. By focusing on the most strategic ad spend, you can still win share of voice against private label brands and reach more of your target audience during this critical time.
Feel confident in murky times
As 2023 begins, financial outlooks continue to be uncertain. However, it is certain that consumer behavior is always changing, and brands must be prepared. With economic uncertainty at the forefront of many consumers’ minds, brands need to stay current with shopper behavior and spending patterns to understand what you can do to influence their purchase decisions.
By implementing recession-proof marketing tactics that can withstand these trends, you can feel confident that your brand will stand the test of time and come out stronger than ever before.
Molly McFarland is co-founder and chief revenue officer of AdAdapted.
