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Thursday, February 29, 2024
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Cautious, Guarded, Financially Focused: The State of Consumers in 2023, from NIQ

Consumers are feeling “unsettled,” and it will impact their spending year. This is the key takeaway from the NIQ presentation “What Comes Next for Retail?” at The NGA Show last month. The presentation focused on U.S. data from NIQ’s latest consumer outlook report.

The report describes consumers as “cautious,” “guarded,” and “financially focused.” This isn’t so much a qualitative change from previous years as it is a continuation and expansion of trends that have been building since the start of the pandemic.

“Pervasive cautiousness has certainly been an emerging trend over the last few years, but I would say it’s the prevailing ‘causes’ of cautiousness that have shifted year-to-year,” NIQ VP of Total Wellness Sherry Frey commented in an email Q&A. “This year, the financial burdens are front and center, where in the last couple years, consumers were also very preoccupied by their sense of safety / access to vaccines / health outlook.”

“Another factor driving this year’s unique focus on finances and related cautiousness is the compounding effects of things like inflation. Prices have been rising for the last few years, and even though inflationary growth is decelerating in many cases, actual prices have not gone down — so, everyday costs of living are veering further from perceived comfort zones — the disparity being most pronounced in the last year.”

Inflation and financial uncertainty are driving changes in spending patterns, namely, consumers are spending more on essentials like groceries and less on discretionary things like eating out and food delivery. More than 4 in 10 (42%) of Americans surveyed said they plan to spend more on grocery and household items, including fresh produce (38%), fresh meat (38%), dry / canned grocery products (33%), and beverages (29%).

However, even with the increasing financial focus, consumers — especially younger ones (18-34 years old) — are still prioritizing sustainability. NIQ data show that products with sustainability and social responsibility claims experienced 8.1% more growth in the past five years than products without these claims.

The data also reveal a potentially big opportunity, as 28% of consumers find it difficult to find sustainable options. “We’ve seen an increasing consumer interest in sustainability and an increase in products with sustainable claims, but we’ve also seen an increase in consumer confusion on how to find sustainable products on the shelf,” Frey said.

Food and beverage brands can partner with retailers to help consumers find the products they’re looking for. “Consumers want assistance from brands and retailers specifically to make sustainable options more identifiable and also more affordable relative to category,” Frey continued. “Opportunities to reward or incentivize sustainable choices via loyalty programs is one way retailers and brands can partner to meet consumer need as well as creating ‘sustainable aisles’ (be that on or offline) making it easier to find sustainable options whilst providing the transparency around claims so consumers know they are making a genuine choice.”

Finally, NIQ looked at how the omnichannel shopping experience is changing. Overall, in-store sales growth increased in 2022, while online sales growth declined. In the food and beverage space, in-store purchases accounted for 90% of sales last year, and consumers identified food products, like fruits and vegetables, bakery items, and meat and seafood, as the top items they insist on picking out and purchasing personally.

To learn more about NIQ’s 2023 consumer outlook from a global perspective, download the full report.

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