Despite inflation, U.S. consumers continued increasing their spending across channels in March 2022.
According to the March 2022 McKinsey Consumer Pulse Survey, U.S. consumers spent 18% more in March 2022 than they did two years earlier, and 12% more than they were forecast to spend based on the pre-COVID-19 trajectory. This increase is occurring both online and in physical stores.
The survey indicates that year-on-year spend growth in e-commerce was 27% in March 2022. The total uplift in e-commerce penetration, from the onset of COVID-19 until March 2022, was 33%.
Meanwhile, the survey shows in-store spending grew 8% year-over-year in March 2022, compared with approximately 5% in early 2021. More than half of surveyed U.S. consumers have already resumed their normal out-of-home activities; another 20% are in the process of returning to their pre-pandemic routines outside the home. However, spending on home improvement and maintenance is still growing, with spending in this area 11% higher than pre-COVID-19 projections, even after adjusting for inflation.
Respondents in every age and income group spent more of their money, but spending growth was highest among millennials (17%) and high-income consumers (16%). Credit card debt among respondents is creeping back up to 2019 levels.
The survey also unveiled consumer trends in two key areas:
More respondents reported switching to different brands and retailers in 2022 than at any time since the beginning of the pandemic, trying to look for the best price due to inflation.
Product availability, which was a big reason for switching brands in 2020 and 2021, still matters a lot, but is less of a differentiator than it was at the height of the pandemic. Meanwhile, price is at the top of the list of respondents’ motivations for switching.
90% of respondents have noticed prices going up. In particular, prices for gasoline and groceries.
Environmental, social, governance (ESG):
Over two-thirds of respondents from younger generations say at least one aspect of environmental, social, and governance (ESG) factors is very important.
Gen Z respondents prioritize authenticity and social issues such as diversity, equity and inclusion.
Millennial respondents prioritize authenticity, together with health and environmental issues.