Consumers are showing restraint as confidence declines. Greg Petro, CEO of First Insight Inc., told WWD that data is pointing to future “spending restraint,” and that it follows a trend he hasn’t seen since just before the Great Recession.
Women shoppers were aware of changing market conditions at the time, according to Petro, and had expressed reservations about future spending just before the bubble broke. Now, during supply chain interruptions, he’s seeing the same patterns emerge once more.
“What concerns me is that when you look at the statistics and numbers of COVID-19 outbreaks across the United States, as well as the death mortality rate, the number of vaccinated people, and those who have gotten COVID-19, it all seems to be trending in the right direction [when compared to early pandemic numbers].” So, what’s the big deal? Why are people worried about shopping and getting out to do things?” Petro expressed his thoughts.
Female shoppers, according to Petro, are more connected to their social networks. And it’s best to listen when they’re restrained, he says.
Despite a 0.7 percent increase in retail sales from July to August, consumer confidence is declining. The Conference Board said in August that the Consumer Confidence Index had dropped to its lowest level since February. The board also stated that the Present Situation Index, which is based on consumers’ assessments of current business and labour market conditions, fell to 147.3 in August from 157.2 in July, and that the Expectations Index, which is based on consumers’ short-term outlook for income, business, and labour market conditions, fell to 91.4 from 103.8 in July.
Concerns about the Delta variant, as well as, to a lesser extent, rising gas and food costs, have resulted in a less positive view of present economic conditions and short-term growth expectations, according to Lynn Franco, senior director of economic indicators at The Conference Board. Consumer spending plans for homes, automobiles, and major appliances all dipped somewhat, while the percentage of people planning a vacation in the next six months increased.”
Surprisingly, First Insight data done on August 5 and released on August 10 forecasted the dip in consumer confidence reported by the Conference Board. According to statistics from First Insight, the Delta variant hurts customer sentiment. The amount of customers responding to First Insight that they are “very or somewhat concerned” about COVID-19 increased by 25%, the biggest one-month increase since March 2020. Retailers and brands should be prepared for a decline, according to Petro, based on current consumer attitudes and historical patterns.
In terms of gender disparities, the First Insight data revealed that women are “significantly less likely to be vaccinated than men, with fully one-third of women [respondents] stating that they don’t intend to be vaccinated versus only 18 percent of men,” while 82 percent of male respondents “have already received or plan to receive the COVID-19 vaccine versus 67 percent of female respondents,” according to the company.
According to the survey, 77 percent of female consumers “confirm that the coronavirus has influenced their purchase decisions compared to pre-pandemic compared to 70 percent of males,” and 73 percent of women “feel unsafe testing beauty products/makeup versus 70 percent of men,” according to First Insight. In stores, 61 percent of female retail employees reported they felt uneasy working with a sales associate, compared to 52 percent of male employees.
Petro also provided his perspective on the present economic scenario to add to the current situation’s context. According to him, the stimulus package pushed a lot of money into the market in response to the pandemic. While it was necessary, it gave the economy an artificial boost that, when combined with the epidemic itself, threw supply-and-demand curves out of whack. “Demand variability” and inflationary price trends, according to Petro, are also placing pressure on the market.
Petro believes the drop in confidence is due to customers anticipating a day when they would have to pay the piper in the form of greater taxes for the stimulus measures. Meanwhile, Petro encourages brands and retailers to carefully listen to their customers and alter their merchandising and pricing strategies as needed.