While the absolute darkest days of the pandemic might seem to finally be in the rearview mirror, consumer confidence remains tenuous in light of continued economic uncertainty.
Through a survey of 1,500 American shoppers during late February and early March, retail consultancy Alvarez & Marsal found that most aren’t much more at ease with the idea of shopping—or spending—than they were six months ago.
While the Omicron variant has ebbed and surged across the country, shoppers are clinging to pandemic-driven habits like shopping online and using omnichannel services. What’s more, rising inflation has deepened anxieties about being able to afford essentials, prompting many to pull back on discretionary spending.
“I am surprised by the extent to which the shock of Covid, and the accelerated learning of new shopping behaviors, has stuck,” managing director Jonathan Sharp told Sourcing Journal, referring to services like online ordering and curbside pickup. Eighty percent of shoppers said they’ve stuck to purchasing patterns developed during the pandemic, a mere five-point drop from the fall, when 85 percent said they planned to retain their new habits.
The propensity to condense purchases into fewer transactions, stocking up instead of venturing out to stores on a regular basis, has also persisted. More than half (54 percent) of consumers said they plan to shop less frequently over the course of the next six months, and 24 percent said they plan to purchase more goods when they do make a transaction.
Sharp noted that the survey’s insights were “riddled” with reactions to rising inflation. “It’s becoming a reason not to shop, a reason not to buy a product or a service,” he added. “It’s galloped into the number one barrier to shopping, whereas before you had mask mandates and health concerns”—factors that are now fading. Inflation has risen to a 41-year high, driving up prices on consumer goods of all kinds. According to Sharp, shoppers “expect that they will have to spend more on basic needs.”
Shoppers said they anticipate increasing spending on basic needs by an average of 24 percent this spring, while limiting spending on indulgences by 12 percent. Those sentiments could spell continued difficulty for apparel retailers, Sharp said, noting that “shopping is dropping from the leisure repertoire of consumers,” as practical expenses dominate more wallet share.
Nearly half (49 percent) of respondents reported feeling that the products and services they desire have become too expensive to afford, up 10 percent from Alvarez & Marsal’s September-October survey. Shoppers with income levels between $50,000 and $70,000 saw the largest increase in price concerns, with 50 percent saying that necessities have reached untenable highs.
In light of fears that the cost of goods and services will continue to rise, they are turning to big box retailers and membership warehouses. “The consumer is bargain hunting—you can see that in terms of the online and apps that they’re planning to use,” Sharp said. Double-digit increases are projected for apps that allow consumers to shop for goods from Amazon (20 percent), Walmart (17 percent), Dollar General (14 percent) and Costco (14 percent) over the course of the next six months.
While spending stands to remain constrained across many categories, like apparel (down 11 percent) and footwear (down 9 percent), the desire for some non-essential products saw marked improvement from the fall. Demand for home decor saw a 10-point improvement since the group’s last survey—a larger jump than any other category outside of fresh food—while appetite for personal care products grew by 9 percent. “We’re being seen by other people now, and we have to look and smell nice,” Sharp said, explaining the rising interest in products like soaps, shampoos and fragrances.
And it appears that the home improvement and DIY wave that took hold during the pandemic is rising again in intensity. Sharp believes that shoppers could be attempting to make aesthetic improvements to their homes in light of the fact that housing prices have also ballooned, and they’re putting off plans of moving until the bubble bursts. What’s more, “50 percent of respondents are working from home at least half of the work week,” he added—far from the mass return-to-work that was expected this spring.