May 05, 2022 PITTSBURGH–(BUSINESS WIRE)–Nearly 75% of consumers have less confidence to spend today as inflation hits a 40-year high according to a new First Insight report, The State of Consumer Spending: Inflation Impacting Consumer Confidence.
This report reveals that 97% of consumers are reprioritizing how they spend in order to afford their top four most critical purchases: groceries (56%), gasoline (43%), housing costs (29%), and healthcare (18%).
Eighty-two percent of respondents indicated that they are searching for less expensive ways to shop through sales and promotions, 40% are staying within a budget, and 28% are simply buying less overall.
Leading the discretionary expenditures cuts, dining out ranked highest with 42% of consumers reducing their restaurant spend in order to afford gasoline and groceries. Overall, 33% are spending less on entertainment, 30% are cutting organic or premium grocery items, 30% are saving by travelling less, and 28% are cutting out fast fashion.
“With inflation at 8.5%, rising prices will continue to impact all businesses for the foreseeable future,” says Greg Petro, CEO, First Insight. “This data indicates that many industries, which had hoped for a post-pandemic rebound in 2022, specifically Hospitality, Travel, and Entertainment, may be faced with yet another difficult year. Furthermore, categories that saw an increase in spending during the pandemic, such as jewelry, automotive, premium groceries, and apparel, will most likely see a contraction in consumer spending for the next several months. Companies must work to get an immediate understanding of how consumers are going to change in the days and weeks ahead by engaging with them directly to anticipate and respond.”
Despite inflationary pressures, consumers are committed to keeping up appearances and remain devoted to their pets. Only 16% will cut beauty, personal care, or grooming services. Pet service remain important to 84% of the consumers surveyed.
Additional findings from this report, which is the first in an upcoming series of consumer insights, include:
- The lowest spending priorities include home décor (8%) which surged during the pandemic, as well as two of the sectors which the pandemic hit hardest: travel & vacations (7%), and gym memberships (7%).
- Within the grocery category, 41% say that they will save money by cutting back on name brand product purchases. Thirty-seven percent say that they will reduce their consumption of meat and seafood in response to rising prices, 34% will reduce their snack food purchases, 29% will reduce purchases of alcohol and spirits, and 26% will buy fewer organic products.
- The entertainment industry sustained huge losses due to pandemic lockdowns and regulations. With rising prices, many consumers indicate that they will reduce their spend at movie theatres (39%), live concerts (32%), nightclubs (30%), sporting events (29%), streaming services (27%) and amusement parks (27%).
- Within the apparel, footwear, and accessories category, 33% say that they will cut back on buying jewelry due to higher prices. Other expenditures where consumers will save include dress shoes at 29%, casualwear at 29%, season-specific apparel at 26%, handbags at 26%, and season-specific footwear at 25%. Only 9% of consumers say that they will reduce their spend for childrenswear.
- Travel will be reduced. Forty-two percent of consumers say that they are driving less. Thirty-five percent are taking fewer vacations, 22% are spending less on hotels, 18% plan to purchase more fuel-efficient or electric vehicles, and 18% have opted to drive to a destination rather than to fly.
About First Insight
First Insight, the world leader in Next-Gen Experience Management (XM), is transforming how companies make better decisions leading to a sustainable future. Customers include some of the world’s leading vertically integrated brands, department stores, consumer products companies, mass merchant retailers and wholesalers. For further information, please visit www.firstinsight.com.
First Insight’s findings are based upon a survey conducted through its proprietary platform. The report is based upon a sample of 1000 U.S. adults fielded in April 2022. The sample was proportionately balanced by generation, region, and gender. Further details on the findings are available upon request.
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