Consumer confidence is declining as shoppers reprioritize purchases to meet budgets, a new report affirms.
On the heels of ongoing bad news about inflation and amid Wall Street tumbles, a new report confirms that consumers are concerned and pulling back. According to findings from a recent survey conducted First Insight, 75% of consumers have less confidence today to spend today and a whopping 97% are reprioritizing their buying habits to better afford their most critical purchases.
At the top of those critical purchases: groceries, followed by gas, housing costs and healthcare. Just when foodservice traffic was rebounding as the pandemic’s grip eased, consumers are taking a step back and returning to eating at home to rein in costs. Dining out ranked first in discretionary expenditure cuts, with 42% of consumers reporting that they are spending less on eating out to afford groceries and fuel.
People are also more mindful when they are grocery shopping. First Insight’s report revealed that 41% of shoppers plan to save money by cutting back on “name brand” product purchases at grocery stores. In addition, more than a third (37%) said they will lower their intake of meat and seafood, 34% will reduce snack food buys and 29% will cut down on alcohol and spirits. Specialty items are also taking a hit: 30% are not buying as many organic or premium grocery products as they did before.
As one might expect in this environment, shoppers are looking for deals. A sizable 82% of survey respondents said they are taking advantage of sales and promotions to save money.
Retailers that sell nonfood items can take heed of other findings. According to this poll, home décor ranks among the lowest spending priorities, along with travel and gym memberships. Less impacted are pet care and personal care/appearance, as only 16% indicated they will slash beauty or personal care and as 84% said that pet service is still important to them.
“With inflation at 8.5%, rising prices will continue to impact all businesses for the foreseeable future,” remarked Greg Petro, CEO at First Insight, a firm specializing in next-gen experience management. "This data indicates that many industries, which had hoped for a post-pandemic rebound in 2022, specifically hospitality, travel, and entertainment, may be faced with yet another difficult year. Furthermore, categories that saw an increase in spending during the pandemic, such as jewelry, automotive, premium groceries, and apparel, will most likely see a contraction in consumer spending for the next several months.”