Consumer Confidence Report Analysis
In the past couple days, you may have stumbled upon the topic of “Revenge Spending.” I mean, everyone’s talking about it. This refers to the phenomenon of people having been cooped up for the past 15 months who are now on a tear to spend money, especially in categories that saw massive drops in purchase volume while in lockdown (e.g., apparel, restaurants, travel). The question is, how long will this last? As a follow-up to our Retail Report: Consumer Confidence blog in March, we wanted to analyze how Revenge Spending has affected or will affect retail consumers’ confidence levels.
Revenge Spending Differs Among Demographics
According to McKinsey in this Forbes article, the highest-income demographics will return to luxury spending. For younger consumers and lower-income households, it is expected that they will focus on dining out. They also are expected to continue the trend of shopping for home goods and gardening purchases. However, as food and gasoline prices continue to rise, their Revenge Spending may be short-lived.
Consumer Confidence Differs Among Various Income Groups
Visa’s economists note that through March, consumers had a positive outlook due to vaccination rollouts and financial support (such as mortgage forbearance and loan deferrals). “However, the approaching expiration of many programs has left consumers feeling uncertain about the future. Nearly half of consumers have missed at least one rent or mortgage payment during the pandemic. Rent debt from those missed payments may affect as many as 14.2 million renter households out of a total of 43 million renting households. Many of these renters could face eviction when the moratorium ends at the end of June.” This economic concern raises the potential for Revenge Spending to return to normal sooner than expected.
According to Morning Consult, consumer confidence dropped in May in 30 out of the 50 states. However, May indexes across various income groups were up versus the 12-month average.
Morning Consult Consumer Sentiment Index by State
Plan for the Unexpected
As the previous year created an anomaly in how users shop and interact with brands, brands must adjust how they view their customer data and how they want to test out new channels to align with consumers’ new purchase behavior. How does foot traffic affect my online sales? How does online traffic affect my in-store sales? These are both answerable questions when starting with a Strategic Learning Agenda. We advise our clients to start with a Strategic Learning Agenda, Media Mix Model, or both, to clearly outline opportunistic channels, benchmarks, measures of success, and ROI goals.
Interested in organizing your own Strategic Learning Agenda? Let’s talk!