Have retail consumer priorities changed again?

Understanding what truly motivates purchasing decisions has always been an incredibly important—but difficult—part of retail. And right now, it seems harder than ever.

From geopolitical tensions to the faltering economy and from climate change to social and cultural turbulence, it feels like uncertainty is suddenly everywhere. And that’s feeding into questions of how, where, and why people shop.?

It’s the economy

Just consider how quickly consumers have pivoted from health to the economy. Our new global consumer research finds that just over half (51%) of consumers are now worried about their personal finances. And slightly more (56%) are concerned about their country’s economic outlook.

This shouldn’t be surprising given where the economy is right now. The research shows a huge eight in ten consumers say inflation and the rising cost of living are their top economic concerns.

But it’s not the only factor weighing on consumers. The research also shows 46% remain concerned about their personal health. That’s still a high figure by any measure. And it shows there’s a complex mix of different consumer sentiments swirling around at the moment.

Experience is back

One impact of this is the return of experience as a key driver of consumer behavior. I see a real desire for simple, home-grown, communal experiences out there.

Just last weekend, for example, we hosted a mini-triathlon in my hometown. We had a band playing to the crowd, and all the works. It was just the epitome of good, clean, small-town family experience.

And, guess what? Over a thousand participants showed up! All to our little town of about 8,000 people. It was amazing to see all that desire for simple shared experience.

A time for meaning

This return to experiential makes sense on several levels. First, there’s a lot of pent-up demand from the past couple of years. At a very basic level people want to be able to come together again.

But, also, as they start to feel the pinch in their disposable income, people are spending more of their time and money doing things rather than buying things. The focus is very much on seeking out meaningful human experience—not spending on extravagances.

I think this is true in many places around the world. For instance, my British in-laws were just recently telling me all about the street parties that were taking place in the UK for Queen Elizabeth’s Platinum Jubilee. Again, very low-key, local, and low-cost community fun.

Frugality reigns

I think you can see the same drivers behind the trend for repurpose, reuse, and resale. Clearly, a lot of this is about the demand for sustainability. But there’s little doubt it’s tied in to economic sentiment as well.

In fashion, for example, I’m seeing a lot of people “shop your closet.” This is a really great initiative where you sort through everything at the back of the closet for items you haven’t worn for a while, and maybe forgot you even owned.

I just did it myself, and uncovered all sorts of wonderful things I had no idea I still had. It was just like getting something new!

It’s important to understand this isn’t about shutting retail out of the equation. Clever retailers are getting into the reuse and resale market in a big way. It’s both cost effective for consumers and a great sustainability initiative for the fashion industry.

Two priorities

How should retailers respond to these shifts in consumer behavior? I think there are two priorities.

The first is about precision. Retailers will come under pressure to raise prices to maintain margins. But shoppers are going to be highly sensitive to price over the short term.

To resolve that tension, strong analytics capabilities will be essential. Specifically, precise data-driven insights into price elasticity, competitor pricing, and so on. Retailers will need to understand, at a really granular level, when and where they can raise prices. And when they can’t.

The second priority is to double down on personal retail. Having a strong and empathetic customer engagement strategy is going to be critical in the months to come. That’s about being transparent, honest, open, and having a very clear understanding of where your customers are right now.

These kinds of intelligent, personalized, targeted, data-led capabilities are not a new concept. But they’ll be needed more than ever as retailers look to nurture their customer relationships through the months ahead.

Find out more in our new report: What’s really driving retail purchasing today? #retail