Consumers could curtail spending in months ahead
Concern about rising energy prices and higher medical costs has many Americans expecting to spend less in the months ahead, a recent Deloitte study revealed. Despite showing no signs of spending less in recent months, the Deloitte survey found that nearly three-quarters (74%) of Americans believe higher prices could slow their spending in the months ahead. Deloitte's study also revealed that mobile and social connections are helping shoppers make savvier buying decisions in the wake of the recession.
According to the survey, more than seven out of 10 (71%) respondents cite concerns about higher energy prices, up from 54% at this time last year, and nearly one-half (47%) point to higher medical costs. Additionally, 44% indicate political unrest in other countries as a factor that could cause them to lower their spending.
While four out of 10 (43%) consumers surveyed feel the economy is still in a recession, Americans in higher income brackets appear to have a more optimistic outlook than those at lower income levels. Nearly half (45%) of households earning $100,000 or more say their confidence in the economy has improved over the past six months, compared with 24% among those earning less than $100,000.
"Consumers continue to be resilient and give retailers reasons to be optimistic, despite their apparent lack of confidence in the economy," said Alison Paul, vice chairman and U.S. retail sector leader, Deloitte. "With day-to-day expenses on the rise, retailers must be innovative and offer more than just low prices to attract customers. By interacting more intimately with consumers through mobile, social media and other emerging platforms, and articulating a message of value and quality, retailers will do well with worried shoppers."
Deloitte reported that its survey revealed consumers are having a harder time finding good deals. Just over one-quarter (27%) of consumers surveyed say stores are offering more value for their money, down from nearly half (45%) of consumers who said so at this time last year. Meanwhile, 60% search more online to get the best product or price.
When referring to the in-store experience, more than half of consumers surveyed (54%) reported less sales help in the stores. Almost one-third (32%) said stores are running out of merchandise faster, and shoppers appear to be turning to their mobile phones to locate product inventory and seek guidance in the shopping process.
Among survey respondents who own a Web-enabled smartphone (32%), more than four out of 10 (43%) said they have used it specifically in a store to assist in their shopping; 37% wanted to use their phones while in a store but couldn't because of connectivity issues. Additionally, four out of 10 (40%) consumers surveyed interact with retailers through social networking sites to find out about promotions, browse products or review recommendations.
"Consumers are challenging retailers to be creative and deliver a multichannel experience that stands out," continued Paul. "Many retailers are considering investments such as providing Wi-Fi connectivity in the store, which is an excellent way to connect with the shopper at the right time during the buying process. Of course, training for store associates needs to accompany these infrastructure changes to be sure associates are knowledgeable and ready for this more informed consumer."