Consumer Spending Lags Economic Uptick
The economy may be showing signs of life, but consumer spending on all but the essentials is still lagging.
According to a new survey conducted by Empathica Inc., (a provider of customer experience management programs) of more than 6,500 U.S. consumers, many plan to cut spending across every discretionary spending category, while maintaining spending on essentials such as gas, groceries and pharmaceuticals.
“There’s continued sentiment that things are tough out there,” Gary Edwards, chief customer officer at Empathica, tells Marketing Daily. “Though we’ve seen from other sources an uptick in jobs and other [areas], there’s still some continued difficult news.”
Top of mind among consumer concern when it comes to spending are the economy (cited by 31% of respondents) taking on more debt (25%) and job security (19%). Moreover, 60% of consumers said they felt their financial situation is more difficult than it was six months ago, while nearly a third said their situation was the same.
To adjust, retailers, restaurateurs and marketers must continue to provide value for consumers beyond simple price-cutting and discounting, Edwards says.
“When people spend less, it’s not that they expect less. They want more for their dollar,” Edwards says. “There’s an expectation in better service and this puts the service provider in a difficult place.”
The good news is many consumers feel the economy is on the upswing. A third of respondents said they felt their financial situation will be much or somewhat better in the future, with younger consumers having a brighter outlook than older consumers.
Yet at the same time, retailers, restaurateurs and marketers need to ensure they are not only attracting new customers with discounting, deals and sales -- they also need to maintain a higher level of service to keep their current client base satisfied when the economy improves.
“What you’re trying to drive is habit,” Edwards says. “That means eliminating surprises -- it doesn’t mean doing anything extraordinary other than getting it the same and right every time.”