Let’s Set the Scene…
While 2022 has been a year of stabilization for U.S. consumers, it has also left many question marks about the present and the future. There is no doubt that the consumer — despite all of the headwinds in 2020 and 2021 — was far more resilient than many of us could have expected. There was more disposable income, and fewer places to spend it. Comfort in spending on tangible items took away some of the pain, at least temporarily, as restaurants shuttered and the experiential economy halted. The retail industry, especially mass merchants and grocers, thrived as consumers spent discretionary dollars on their homes, entertainment, children and pets. And, consumers felt wealthier than before the pandemic, thanks to stimulus injections, a booming stock market, higher home and car values, and high personal savings rates. Retailers — although forced to make alterations to business models while also facing head winds in the supply chain model —fared better than many imagined.
But 2022, so far, tells a different story for the U.S. retail consumer. As many look to life beyond the pandemic, there’s a return to normalcy that has shifted how consumers want to spend their share of wallet and time. A resurgence of pre-pandemic activities is forcing the consumer to make more choices than they had to over the past two years. And, looming over it all are the current economic conditions in the U.S. Suddenly, the consumer has less disposable income in a world where there are once again more ways to spend money. All of these conditions are forcing the consumer to make active or passive choices on how to allocate their discretionary dollars. This choice creates obstacles for the holistic retail industry, just as retailers are finally overcoming out-of-stocks caused by supply chain shortages.
Despite the hurdles and changes in shopper behavior this year, there are still bright spots and opportunities for retailers to meet the evolving needs of this slightly altered consumer base.
By looking at the ways in which the consumer has shifted in the post-pandemic period — as well as how they’re reacting to inflation and the current climate — we can uncover the short-term and long-term strategies needed to attract and retain retail customers.