Glass half empty or half full? What consumers are telling us about their economic outlook
The timing of this cost of living crisis makes it unique. We have experienced financial crises before, but none that have come off the back of a global pandemic. Throughout our recent blog series we have explored how this unique combination of circumstances is affecting consumers, what post-pandemic behaviours and trends are surviving the cost of living crisis, and the implications for brands.
In our final post for the series, we look at how consumers are feeling about the coming months.
Last week the FTSE 100 stock index closed at a record high, The Bank of England is predicting that inflation will fall quickly during 2023 and many economic commentators have been making predictions that the economic outlook is brightening and the worst of the cost of living crisis is over. But are consumers feeling as optimistic?
Our conversations in recent Customer Closeness sessions suggest that the impact of the pandemic followed by a financial crisis has left consumers more uncertain and cautious than ever about what the future has in store, and perhaps less inclined to ‘trust’ the experts who tell them that everything is going to be OK.
We heard from Maya* who told us that she still believes there are tough times ahead: ‘To be honest I am still waiting for us to hit the iceberg in terms of costs and bills. The only real hope is that with the weather hopefully improving my energy bills should reduce’.
Alan* told us that he feels as though he is ‘walking a tightrope’ with ’very little room to manoeuvre’. ‘I feel very uncertain about how things will transpire in coming months and even if the economy improves, I do not have much hope that prices will come back down. Therefore we need to be the ones to adapt and make changes to be able to cope’
Consumer cautiousness does suggest that recessional behaviours may continue. Research by Deloitte in January of this year shows that pressures around inflation mean consumers are being savvy with their money and 1 in 4 consumers indicate they will increase their use of loyalty schemes and coupons to save money in 2023, and another one in four will look to repair rather than replace items.
As businesses we should be buoyed by the positivity in the media, but there is a risk we become out of sync with how customers are feeling. There are still opportunities to drive positive brand perceptions and brand loyalty by demonstrating we understand things are tough and are doing everything possible to help at what is still a very difficult time for most. By continuing to support consumers through the tough times, brands can bring a little optimism into all our lives and that, in turn, will start to build hope amongst more of us that better times are coming.
*names changed for confidentiality