Survey: Consumers’ biggest concern is inflation; focused on basic needs

Overall consumer sentiment remains weak.

That’s according to Alvarez & Marsal Consumer Retail Group’s Spring 2022 Consumer Sentiment Survey which found spending reticence is being driven by concerns over inflationary pressures and price increases, which was cited as the #1 barrier to spending by 49% of respondents. As a result, consumers have increasingly been focusing their spending on basic needs and experiences, while spending on indulgence and gifts continue to lose priority.

The survey was fielded as the Omicron variant faded across the USA, and just before the Ukrainian crisis began.

“Our survey shows that consumers are not much more confident than they were in the fall of last year,” said Jonathan Sharp, managing director in Alvarez & Marsal’s Consumer and Retail Group, and lead author of the report. “They continue to be focused on basic needs with less frequent shopping trips, and their biggest concern is inflation.”

At the same time, when looking at the restaurant and vacation space, there is some evidence that consumers have emerged from pandemic hibernation. Eighteen percent are dining out more and 44% are dining out the same (38% are dining out less). Almost half of the surveyed respondents plan to travel this spring – 19% plans to travel internationally, while 81% plan to travel within the U.S.

“While they may not feel optimistic, consumers are beginning to open their wallets, go on vacation, and eat in restaurants, presenting opportunities for retailers and businesses alike,” said Sharp.

The majority of consumers also continue to regard shopping as a largely functional pursuit, rather than a leisure one, with 59% of respondents mostly or only shopping when there is something they really need. As a result, they are increasingly bundling shopping missions – shopping less often and buying more items per trip.

Some additional key takeaways include:

• Eighty percent of respondents stated they have stuck with the changes they made during the pandemic.
• Ninety percent of respondents in both the fall and spring surveys stated they plan to spend the same or more money on basic needs in the next six months.
• Forty-six percent of respondents indicate they plan to save more in the next six months, which is a vast decline from the 71% of respondents in the fall survey.
• Price concerns have increased across all income levels and are flat across ages and ethnicities, pointing signs of inflation. Forty-nine percent of respondents said the products / services they want have become too expensive, compared to the 39% of respondents in fall.
• The experience of shopping seems to have clearly improved – 20% said the experience of shopping is not pleasant or the service is poor compared to 45% of respondents in the last report.