WHEN WE EARN WE ARE WORKERS, WHEN WE SPEND WE ARE CONSUMERS
Vicki M. Young
Sourcing Journal
Mon, July 3, 2023
One size does not fit all.
Data from Deloitte Service LP’s global consumer tracker indicates that the consumer is transforming to a complex mosaic of unique needs, wants and preferences.
An aging population, declining birth rates and increased diversity are contributing to the transformation of the consumer base. And these changes could present adaptation challenges for a retail industry that’s been “built for mass production, distribution and marketing,” according to Lupine Skelly, research leader for the retail, wholesale and distribution sector at Deloitte’s Consumer Industry Center.
The tracker surveys U.S. consumers every month and people in 23 countries every other month. Currently, there are indications that many consumers believe the worst economic uncertainty could be in the rearview mirror. But inflation remains top of mind, with 75 percent of global consumers concerned about rising prices, Skelly said.
Once consumers realized that inflation was going to be here for a while, discretionary spending took a nosedive as people focused on building up their savings and spending only on necessities.
“What’s encouraging today is that the [data] is indicating some stability in the last few months,” Skelly said, noting that discretionary spend is catching up. Even so, inflation is impacting how consumers spend their money.
Skelly noted that in September 2021, 56 percent of global respondents said they purchased sustainable goods. That number fell to 46 percent as inflation hung around. Even sentiment on climate change has seen a decline, with 68 percent now indicating that climate change is an emergency versus 72 percent last September.
“This tells us that people associate sustainable goods as being more expensive, and people are really having to do right by their wallet rather than what’s right for the planet,” Skelly said. “One way to look at this is that when push comes to shove, sustainability kind of goes out the window. I think you can also spin a story that despite record inflation, we still have four in 10 say that they’re prioritizing sustainable purchases.”
The tracker also found that despite the strain of inflationary pressures, consumers are figuring out ways to splurge on themselves. Seventy-seven percent of global consumers spend on some kind of indulgence in the past month. That amount is even higher—closer to 80 percent—across the U.S., Canada, Sweden and Australia. The trend is “pervasive across income groups and generations,” Skelly said, noting that the median spend is $32. Food and beverage is the most common treat, followed by apparel and footwear.
In addition, men and women splurge at about the same rate, but “globally, men spend almost 40 percent more on items compared to women when they splurge,” she said. Millennial men spend $20 more than their female counterparts.
Skelly pointed to “interesting opportunities for retailers who can tap into this need to treat ourselves to escape our economic realities.”
She noted that not all countries experienced strong inflation, although in the U.S., the consumer was hit pretty hard and hasn’t quite recovered.
Last year U.S. consumers burned through their savings at a rapid clip, and in December focused on saving money while cutting back on across-the-board spending. “Since February, U.S. consumers are having to make more trade offs and economize more to be able to purchase the groceries they need,” Skelly said, adding that one-third are purchasing lower-cost needs. In addition, private-label purchases rose 3 percent last month.
This summer, leisure and travel is taking a bigger share of wallet, which Skelly said could be good news for apparel and footwear spend. Of the respondents who plan to spend on travel, 69 percent said they were likely to spend on clothing and footwear, versus just 42 percent of those who didn’t plan to travel. “Leisure travelers tend to spend almost four times more than those not planning vacations. That’s averaging $169,” she said.
Data shows that the top 1 percent of Americans is wealthier than the entire U.S. middle class, while 30 percent of the nation’s wealth is held by 0.25 percent of U.S. households. In addition, the back-to-school market is shrinking, mostly because there are fewer students enrolled in schools thanks to falling birth rates.
And with more people spending at least part of their time working from home, consumers have also shifted how they do their shopping and where they eat as they move to digital from physical. “While we were stuck at home during the pandemic, many people were spending a lot of time online or trying to explore new technologies and looking for ways to entertain themselves,” Skelly said, concluding that as many of these behaviors and preferences stick, those producing goods are now competing with the increasing “threat” from digital enticements.
Mon, July 3, 2023
One size does not fit all.
Data from Deloitte Service LP’s global consumer tracker indicates that the consumer is transforming to a complex mosaic of unique needs, wants and preferences.
An aging population, declining birth rates and increased diversity are contributing to the transformation of the consumer base. And these changes could present adaptation challenges for a retail industry that’s been “built for mass production, distribution and marketing,” according to Lupine Skelly, research leader for the retail, wholesale and distribution sector at Deloitte’s Consumer Industry Center.
The tracker surveys U.S. consumers every month and people in 23 countries every other month. Currently, there are indications that many consumers believe the worst economic uncertainty could be in the rearview mirror. But inflation remains top of mind, with 75 percent of global consumers concerned about rising prices, Skelly said.
Once consumers realized that inflation was going to be here for a while, discretionary spending took a nosedive as people focused on building up their savings and spending only on necessities.
“What’s encouraging today is that the [data] is indicating some stability in the last few months,” Skelly said, noting that discretionary spend is catching up. Even so, inflation is impacting how consumers spend their money.
Skelly noted that in September 2021, 56 percent of global respondents said they purchased sustainable goods. That number fell to 46 percent as inflation hung around. Even sentiment on climate change has seen a decline, with 68 percent now indicating that climate change is an emergency versus 72 percent last September.
“This tells us that people associate sustainable goods as being more expensive, and people are really having to do right by their wallet rather than what’s right for the planet,” Skelly said. “One way to look at this is that when push comes to shove, sustainability kind of goes out the window. I think you can also spin a story that despite record inflation, we still have four in 10 say that they’re prioritizing sustainable purchases.”
The tracker also found that despite the strain of inflationary pressures, consumers are figuring out ways to splurge on themselves. Seventy-seven percent of global consumers spend on some kind of indulgence in the past month. That amount is even higher—closer to 80 percent—across the U.S., Canada, Sweden and Australia. The trend is “pervasive across income groups and generations,” Skelly said, noting that the median spend is $32. Food and beverage is the most common treat, followed by apparel and footwear.
In addition, men and women splurge at about the same rate, but “globally, men spend almost 40 percent more on items compared to women when they splurge,” she said. Millennial men spend $20 more than their female counterparts.
Skelly pointed to “interesting opportunities for retailers who can tap into this need to treat ourselves to escape our economic realities.”
She noted that not all countries experienced strong inflation, although in the U.S., the consumer was hit pretty hard and hasn’t quite recovered.
Last year U.S. consumers burned through their savings at a rapid clip, and in December focused on saving money while cutting back on across-the-board spending. “Since February, U.S. consumers are having to make more trade offs and economize more to be able to purchase the groceries they need,” Skelly said, adding that one-third are purchasing lower-cost needs. In addition, private-label purchases rose 3 percent last month.
This summer, leisure and travel is taking a bigger share of wallet, which Skelly said could be good news for apparel and footwear spend. Of the respondents who plan to spend on travel, 69 percent said they were likely to spend on clothing and footwear, versus just 42 percent of those who didn’t plan to travel. “Leisure travelers tend to spend almost four times more than those not planning vacations. That’s averaging $169,” she said.
Data shows that the top 1 percent of Americans is wealthier than the entire U.S. middle class, while 30 percent of the nation’s wealth is held by 0.25 percent of U.S. households. In addition, the back-to-school market is shrinking, mostly because there are fewer students enrolled in schools thanks to falling birth rates.
And with more people spending at least part of their time working from home, consumers have also shifted how they do their shopping and where they eat as they move to digital from physical. “While we were stuck at home during the pandemic, many people were spending a lot of time online or trying to explore new technologies and looking for ways to entertain themselves,” Skelly said, concluding that as many of these behaviors and preferences stick, those producing goods are now competing with the increasing “threat” from digital enticements.
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