How should brands interrupt the latest consumer spending?
Americans say they are stretched too thin amid concerns about a possible recession, so they’re dipping into their cash reserves, and nearly half are falling deeper in debt. But even with this, 73% of adults said most purchases tend to be spontaneous, which may explain why credit card debt is exploding. Shoppers now spend $314, on average, a month on impulse buys, up from $276 in 2021 and $183 in 2020.
The positioning of products on store shelves has a significant effect on sales. Retailers know this, so they are resetting aisles to ensure higher-margin products have more visibility. A strong shelf presence can increase brand awareness and brand loyalty. Remember that your brand is not how you see it; it’s how your customers perceive it. The shelf presence plays a vital role in how customers perceive your brand and your products. Anything from packaging to merchandising can impact sales and the brand’s image.
With impulse purchases becoming a larger share of sales, savvy retailers are experimenting with different shelf positions that increase profitability.
What is an Impulse Buy?
An impulse purchase is a spontaneous decision just before an acquisition occurs. While many consumers think that all purchases are planned and considered, that is not the case.
So why are impulse purchases still increasing? Typically, people impulse buy things that make them feel good; or have an emotional value. Scientists tell us this happens because such items help us feel better and temporarily dampen our unhappy thoughts and self-doubt.
But beyond impulse buying, consumers are still spending.
For one, Americans are splurging on travel and entertainment, putting their money toward experiences outside of the homes where they spent the early years of the pandemic. But because consumer spending accounts for two-thirds of the U.S. economy, policymakers and economists have been closely watching for signs of a cool-down. The Federal Reserve has been raising interest rates since March to dampen consumer demand to combat rising inflation. Still, it may not have much effect as we approach the holiday season.
Are brands leveraging the “still spending” consumer?
It depends on the category and the brand. Despite its PR problems, Starbucks still has lines in the morning and just announced they will rebrand the coffee retailer. However, Apple’s new iPhone 14 seems to be laying a massive egg as consumers don’t see the need to upgrade to a new phone without new features.
It’s now more important for brands to get in bed with their customers to better understand “why” they are customers. The objective of trying to grow a brand may seem myopic as customers defect to less expensive store brands. In simple terms, you need to know “why your customers are still customers.”
The other issue is to ensure your marketing resonates with your audience. Netgear recently advertised their Orbi routers on social media, and it was a disaster as people pushed back against the price and product/customer service problems. It seems there is a massive disconnect between marketing strategy and the audience’s beliefs about the brand.
Any brand that can see into the future and know how consumers will react to rising prices and interest rates is fooling itself. Now is the time for marketers to be agile and quickly respond to changes in the market to leverage changing customer attitudes.
Originally published at https://www.newmediaandmarketing.com on September 14, 2022.