The Considered Consumer
Living with uncertainty and volatility is becoming the norm. While there has been significant economic, political, technological and social upheaval in previous decades, it now feels like we are living in an era where these are more frequent.
As we are living on what feels like a rollercoaster that keeps speeding up, it can seem imprudent to try to predict the future. However, research suggests that thinking about the future (a process known as prospection) can have a positive impact on well-being. So with that being said, I have considered one way that the current turmoil we find ourselves in could impact our behaviour in a future trend I’m naming “The Considered Consumer”.
The Rise of Consumerism
Consumerism developed during the industrial revolution when mass production lowered costs and dramatically increased the supply of consumer goods, and it flourished in the post-war 20th Century.
In his book, Land of Desire: Merchants, Power, and the Rise of a New American Culture, William Leach writes that “The cardinal features of this culture were acquisition and consumption as the means of achieving happiness; the cult of the new; the democratization of desire; and money value as the predominant measure of all value in society”. We’ve all grown used to quickly getting what we want at a low price. However, post-pandemic, the consumer environment has shifted.
The Forces At Play
Cost of Living
The cost of living is soaring globally, and households are being squeezed as prices rise. Inflation is at record highs driven by a combination of the following:
Energy prices started rising at the end of 2021, with numerous factors affecting supply and demand, pushing up prices in what some experts have since called a perfect storm.
Goods shortages due to ongoing pandemic shutdowns in some parts of the world are causing longer waiting times for products globally.
Real wages are falling and are expected to continue falling worldwide in 2022-2023.
Recent economic decisions are causing currency volatility in the UK.
These are interlinked, and in flux. By the time this goes to print, the situation will undoubtedly have changed again. This uncertainty surrounding the cost of living is significantly impacting what we are buying and where we are buying.
Geopolitical Developments
Alongside these forces, and helping magnify them, are geopolitical developments such as the ongoing war in Ukraine and subsequent sanctions placed on Russia. This is pushing businesses to review their supply chains and look to diversify and localize over the next few years, meaning that while prices will go up supply chains should become more resilient.
Metaverse Commerce
The growth of e-commerce is well documented, and the next stage of technological consumerism is the metaverse. Companies are buying metaverse real estate to set up stores that give shoppers person-to-person interaction, product displays, reading material and the ability to try on and physically hold products. For example, Wayfair allows customers to capture their home and visualise a specific product within the same virtual reality space.
Climate Impact
Last but not least, there is a growing awareness of our climate impact and how consumerism contributes to the problem. Some consumer segments are becoming more conscious of their purchases and where they choose to make those purchases. Events such as Black Friday are increasingly seen in a negative light, with some brands actively advertising against Black Friday. One example is footwear brand Allbirds which flipped the tradition into a Green Friday and, instead of slashing prices, raised them and doubled its commitment to sustainability.
The Considered Consumer
So, what impact could all these changes have on how we consume products and services in the future? I’ve identified four characteristics that will drive future shoppers.
01) We buy less.
Shoppers are asking themselves what’s essential and making trade-off decisions on what to purchase. This doesn’t mean they will stop buying altogether but instead think twice before they buy. From February to May this year, for example, Tesco, the UK’s biggest supermarket, recorded a 1.5% drop in sales compared to the same period last year. Ken Murphy, the CEO, referred to this as “early indications of changing customer behaviour as a result of the inflationary environment”.
02) We look to save money on what we buy.
Across the globe shoppers are making more considered buying decisions and making trade-offs when they buy. This year in the UK, Aldi the discount supermarket overtook Morrisons to become the UK’s fourth-largest grocery retailer. Over in the US, Walmart CFO John David Rainey told Yahoo Finance the big box giant had seen “a trade down in both quality and quantity” during the second quarter. Many consumers, regardless of household income, are rethinking their spending and preparing for ongoing squeezes on their finances.
03) We aim for more local goods and produce.
The pandemic shifted our working and shopping behaviours considerably, with many local retailers benefiting from increased footfall. While many have returned to the office since restrictions have eased, the percentage working from home has remained above pre-pandemic levels and desires not to return to the office 5 days a week. Furthermore, high petrol prices have made shoppers reconsider the distance they drive. Shopping locally, both physically and digitally, has benefited from all these factors and will continue to be important to shoppers going forward, albeit at the right price.
04) We want items that are sustainable but don’t cost more.
Climate and sustainability priorities are being driven by consumers, and particularly younger shoppers, who want to be more sustainable but not have to pay more for doing the right thing. The clothing resale market is a perfect example of how both these objectives can be achieved. With many shoppers switching to second-hand goods, the resale market is expected to more than double by 2026.
These behaviours are not new. However, we expect the number of consumers exhibiting them and changing the way they consume to focus on more considered purchases to continue to rise. Furthermore, as the factors driving the behaviours look likely to maintain over the next few months and years these behaviours look like they are here to stay.
Sources
Greater Good Magazine, How Thinking About the Future Makes Life More Meaningful. 2019
Retail Insight Network, Tesco’s UK sales fall by 1.5% amid ‘challenging’ trading conditions. 2022
Financial Times, How Aldi burst into supermarket big league. 2022
Yahoo! Finance, Walmart CFO talks consumers, inventory, back-to-school, and gas prices after earnings beat. 2022
The Guardian, UK shoppers choose local grocers and online stores in Covid-19 crisis. 2020
C. G. Aksoy, et al, Working from Home Around the World. 2022
Fashion United, Report: Resale market to more than double by 2026, US to lead the charge. 2022