What behavior changes are consumers now making to manage record high inflation?
Consumers are having to adapt in this high inflation environment.
🛠 2 out of every 3 (66%) consumers are changing how they manage their expenses, of which almost half (44%) are now dipping into or reducing their savings. Younger generations (Millennials, Gen Z) are making more changes to their financial management than older ones.
These are data from a new survey by McKinsey conducted in July 2022 with 4,000 Americans aged 18+.
💰 They find spending behavior has changed with inflationary prices, with survey respondents saying
74% — are trading down
~50% — their money doesn’t go as far as it did before
43% — adjusting to save more
29% — can’t pay their bills
🛒 Within the high 3 out of 4 (74%) people saying they are “trading down”
60% (most) either adjusted the quantity or pack size of their purchases for necessities
44% decided to postpone a purchase, typically for nonessential items.
“People are also trading down by going to lower-priced stores, switching to brands that cost less, or adopting a buy now, pay later approach.”
🎯 There are differences in behavior changes by income level with lower income more impacted and pulling back, while higher income have not (yet) made significant behavior changes. So, a one-size fits all strategy should not be adopted by brands.
McKinsey reinforces, “Companies should also seek to understand the nuanced sentiments and behaviors among different groups of consumers and the categories in which their businesses operate.”
How well do you know your consumers & shoppers and how they buy your category and brand?