With years of shutdowns, supply chain issues, staffing shortages, inflation, rising prices, and more, it’s hard to be a consumer these days.
Simply put, customers today are tired. They’ve endured years of confusion, uncertainty, and change. And they feel the strain on their wallets. All that uncertainty makes brands wonder if they’re at risk of losing customers.
Customers Feel the Strain on the Wallets
Inflation fears have caused customers to change how they shop. Many retailers, including Target, Best Buy, and Macy’s, report that consumer demand is starting to buckle, with customers pulling back on discretionary spending on clothing, electronics, and home improvement. Instead, customers are shifting more of their budgets to groceries and household basics.
Target CEO Brian Cornell said: “Spiraling inflation forced families to put discretionary purchases on hold and focus most of their spending on necessities.”
Customers have had their defenses up for years, ready for the next blow or change. And it seems we’re close to a breaking point. The money consumers saved during the pandemic is gone, debt is up, and prices continue to rise. It’s no wonder customers are changing their shopping habits again—they’re tired of the mental gymnastics they have to perform to see if they can afford every purchase.
Customers are Spending Less and Looking for Ways to Save
The strain on customers can be felt in their spending habits. 69% of consumers have changed non-essential shopping in the last six months, and a staggering 96% of consumers plan to adopt cost-saving behaviors over the next six months.
Perhaps surprisingly, Gen Z is taking the biggest steps to frugality. More than three-quarters (76%) of Gen Z is doing more product comparisons and research to find better deals.
Consumers are paying more attention to retailers than ever before. They’re looking for deals, responding to promotions, and putting in the effort to find the best deals. With higher prices, customers are more thoughtful about purchases and want to ensure they get the best deal on a high-quality product.
The Impact on Brands
What does this all mean for brands? Are customers really in danger of leaving?
With tightened purse strings and lower confidence, every experience matters. Customers aren’t as loyal as they once were and are willing to try new brands and products if it helps them save money.
Consumers are also more aware of the tactics brands use to entice them. They’re paying attention to raising prices. Brands can’t just push the same products and experiences as always because it can come across as inauthentic and self-serving. This is an incredible opportunity for brands to showcase empathy and meet customers where they are.
Customer experience budgets are growing in 2023 as brands see the power of investing in people and strengthening relationships. Customers may be spending less and researching more, but that doesn’t mean they are gone forever. Brands that foster relationships and build goodwill can build bridges for future sales.
Economic uncertainty has put a strain on customers, but building relationships and investing in customer experience is always relevant. In fact, it becomes even more important during challenging times. Instead of fearing customers leaving, use this time to strengthen customer relationships.
Blake Morgan is a customer experience futurist and the author of The Customer Of The Future. Sign up for her weekly email here.