What parents are thinking: the state of consumer behavior trends going into 2023
We surveyed more than 2,000 parents on their spending habits in recent months and how inflation impacted their holiday spending. Here’s what they had to say.
Consumers have struggled with rising inflation concerns for well over a year, and the uncertainty has had a profound impact on spending decisions. As the prolonged economic downturn stretches into 2023, it’s becoming increasingly difficult to keep a finger on the pulse of consumer behaviors and trends.
Even as inflation shows signs of easing, there is more pressure than ever on consumer confidence. According to a study by Deloitte, the consumer concern for rising prices did not fall below 70% at any point in 2022.
We did a deep dive into consumer behavior and spending habits, surveying more than 2,000 North American parents about their purchasing trends in 2022, including the recent holiday season.
In the first of our two-part consumer research study, here’s what they had to say:
1. Consumers are struggling to budget for recurring living expenses.
As inflation climbed to its highest rate in decades, it’s no secret that discretionary spending is down with the majority of consumers feeling the pinch on everyday necessities. With rising inflation sending prices skyrocketing for most of 2022, more than 75% of survey participants admitted facing challenges budgeting for recurring expenses such as groceries, gasoline and utilities.
Even as inflation shows signs of easing and confidence slowly begins to improve, consumers are still struggling keep up with high costs, looking for more value in the products they buy.
The pessimism from consumers shouldn’t come as a surprise. When we look back at data from our mid-year survey in July 2022, 87% of those surveyed said they expected prices to continue to rise into 2023, with 29.1% forecasting “significant” increases.
2. Brand loyalty is being tested as shoppers look for value.
Brand loyalty is taking a hit in these uncertain economic times. When inflations hits, buying habits change, as our research shows. Shoppers are now buying what they can afford to make ends meet, with an overwhelming 73.3 of those surveyed reporting they have switched brands or selected product alternatives over the past year.
Consumers are extremely price-conscious in the current economic climate, and brands need to adapt their strategies to align with the times. Shoppers need more than a well-known brand name and flashy marketing campaign. They are looking for products that stand out in an ultra-competitive marketplace.
As inflation spreads and supply chain issues leave plenty of room on store shelves, shoppers are focusing more on value and availability when making purchasing decisions. Many are also turning to private-label brands to save money on their shopping bills.
We noticed a change in sentiment from our mid-year survey. In July 2022, only 29.5% of respondents said that they would substitute their product of choice with an alternative to ensure availability.
3. Consumers are looking for sales and coupons to make ends meet.
Not surprisingly, when it came to finding ways to stretch their budgets, consumers were looking for in store sales (73%) and coupons (68.8%) to save on expenses.
In fact, an October study showed more than 90% of consumers were looking for discounts and cashback rewards when shopping online.
Shoppers also considered purchasing generic brands (58.3%), while 57.8% said they would reduce or eliminate unnecessary expenses such as eating out.
What tools are you using to get the most out of your budget?
4. Company values are still more important than the lowest price.
As consumers wait for inflation to be brought under control, there are company values they will not compromise – even if it means paying a few extra dollars at checkout. A total of 54.5% of respondents said they would not support a brand that promoted child labor, while 48% were against the testing of animals.
With more consumers putting a premium on customer service, 35.9% reported that customer care influenced buying decisions, followed by the health and safety of employees (34.9%).
5. Shoppers are turning to discount stores for everyday needs.
Inflation reached a 40-year high last spring, forcing many consumers to look for cheaper options for groceries and other necessities. Not surprisingly, retail heavyweight Wal-Mart was the preferred choice for 70% of survey participants.
With many consumers turning to discount stores to combat inflation, it’s not surprising that stores such as Dollar Tree and Dollar General were preferred by 41% of consumers.
Rounding out the top five shopping options were Target (34.7%), Costco (31.5%) and ALDI (27%).
What stores are you shopping at to stretch your budget?
6. Pricing is important, but high fuel costs have consumers looking for options close to home.
We asked parents what factors went into deciding which stores they shopped at. With the rising cost of living on everyday products tightening family budgets, 74% of replies said that fair pricing was the biggest driver in their decision to choose one store over another.
The rising cost of fuel was also top of mind for consumers, with 59.1% saying a store’s proximity to their home was important. To put an exclamation point on how consumers are searching for value and not just the lowest price, 55.3% reported that the quality of a product also influenced where they shopped.
7. Most shoppers decreased spending over holiday season.
We turned our survey focus to the recent holiday season, asking parents what adjustments they made during the busiest shopping season of the year. More than half of respondents (51.5%) said their budgets decreased compared to the 2021 holiday season. About a third of parents (34%) replied their budgets remained the same, while only 15.4% spent more than the previous year.
Consumer views changed from when the same question was asked six months ago. In our mid-year survey last July, 51.2% planned on spending the same as the previous year, while 36.2% predicted they would spend less.
8. Consumers spent less on themselves and family, and limited travel over holidays.
Recent reports indicate that spending increased during the 2022 holiday season, although most of the parents we surveyed said they were cutting back on their purchases.
We asked our survey participants where they would decrease spending, with 43.9 reporting they would spend less on their families. The exact same number – 43.9% – said they wouldn’t spend as much on themselves over the holidays.
There weren’t as many gift exchanges between friends, with 38.7% spending less on their friends, while one-third of consumers saved money by cutting back on travel.
Not everyone was looking to save, with 15.8% saying they didn’t decrease spending at all.
Where were your biggest cutbacks during the 2022 holiday season?
9. Consumers still preferred the convenience of online shopping during the holiday season.
With pandemic restrictions no longer in effect, consumers returned to brick-and-mortar stores, but not at the rate you might expect.
Online shopping saw a modest bump over the holiday season, thanks in part to the popularity of the buy-online-pick-up-in-store (BOPIS) option.
Most of our survey respondents also preferred shopping online, with 32.7% reporting they did more online purchases and 35.5% saying they balanced online with in-store shopping.
A total of 11% of respondents did all of their shopping online, while only 7.9% shopped exclusively in-store.
When we asked the same question in our mid-year survey, more than half of consumers (54.61%) predicted they would find a balance between shopping online and in-person over the holiday season.
Despite the return of restriction-free in-store shopping, most consumers still preferred to do their holiday spending online.
Where did you spend your holiday budget?
10. Toys were the top product category for holiday spending, thanks in part to popularity of “kidults” toys.
We asked parents to tell us what product categories they spent most of their holiday budgets on, and – surprise, surprise – the toy category was the most popular. After all, the holiday season is for kids, right?
The results were closer than you might think. In fact, it ended up being a three-way dead heat between toys and hobbies (58.4%), food and beverage (57.8%) and apparel and accessories (57.4%). It’s also worth noting that “kidults” are the biggest source of growth in the toy industry, with more than one quarter of annual toy sales attributed to adults.
Health and beauty products (33.6%) were a distant fourth, followed by gifts for the home (28.25%).
11. Consumers were most price-conscious about buying gifts.
With the majority of consumers cutting back on their holiday shopping, most survey participants were most price-conscious about gift buying (61.5%), and went hunting for Black Friday and holiday sales to stay within their budget.
With price increases being felt across the board, 48.3% of parents said they also tried to keep expenses manageable when shopping for food for their holiday dinners. Less dining out (42.8%) and entertaining (32.7%) were other ways consumers tried to save money over the holiday season.
When we asked the same question in our mid-year survey last July, 56.3% of respondents said they planned to be more price-conscious for the holidays, a number that increased as the holidays drew closer.
What were you most price-conscious about over the holidays?
12. Rising prices were felt most in grocery stores.
Piggybacking on the previous question, where consumers reported that they would be more price-conscious on gift giving, an overwhelming 79% of parents we surveyed said their wallets were hit hardest at the grocery store.
Food prices continued to soar in recent months due to skyrocketing inflation, supply issues and the ongoing conflict in Ukraine.
After food purchases, consumers felt the squeeze the most dining out over the holidays (44.5%), followed by the cost of gifts (38.9%).
Most consumers predicted prices would continue to rise when we conducted our mid-year survey. In the summer, 87% felt prices would increase through the end of 2022 and into the New Year. What was most surprising from that survey is that a majority said they would maintain their spending over the holiday, even if inflation meant less bang for their buck.
Where did you notice the most significant price increases during the holiday season?
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