Consumers search for a balance of “cheap” and “luxury” to fight looming inflation
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In this regard data confirms the historical pattern of price realization in the apparel industry: “It has lagged well behind inflation rates and household income growth,” per a recent analysis by McKinsey. Assessing how apparel brands can adapt to the current inflationary environment, the consultancy firm recalls that “From 2010–19, for instance, US apparel prices rose at a CAGR of just 0.4 percent, lagging both the total consumer price index (CPI; CAGR 1.8 percent) and median household income (CAGR 3.8 percent) That gap has recently narrowed, but in the United States, price gains are still trailing CPI growth by about one percentage point”.
“Now we see consumers starting to adopt more value-conscious shopping behaviors. The Consumer Pulse survey found that more US consumers reported switching brands and retailers in 2022 than at any time since the pandemic began, and most of them say they intend to keep switching, primarily to find lower prices. Among those who switched, slightly more than one-third opted to buy private-label products,” concludes McKinsey experts.
Google Insights: “Consumers aren’t ready to give up on small luxuries just yet”
According to Google proprietary insights, consumers globally are seeking ways to cut costs, such as by searching “buy 1 get 1” and “promo code for existing user.” These searches have grown by 60 percent and 100 percent year over year, respectively. “Additionally, we have seen people turning to Google to inform their purchases before spending, as in queries for “best gas mileage,” “prices go down,” and “good time to buy,” the team at Google Marketing think tank, Think with Google, added.
Online and offline shopping searches, like “online shopping dresses,” “delivery partner app,” “shopping centers,” and “store open,” both continue to climb, as observed from search data in English from Global Google. Furthermore, in their July edition, the Google Global Insights team reported that searches for designer outlets had skyrocketed in the past year (90 percent increase, to be more precise.) As they eloquently put it when referring to certain markets such as the US or the Benelux, “This month we’re seeing, in a few particular industries, that consumers aren’t ready to give up on small luxuries just yet. Instead, they’re shifting their priorities to get the best bang for their buck.”
In Europe, the analysts from Think with Google have seen “an uptick in people looking for little luxuries as well. Search interest has risen for items such as “luxus sonnenbrille” (“luxury sunglasses”) in Germany and “luxury underwear” in the UK.”
Early holiday shopping and mega sales events
At Google, they read this data as a sign that “even amid economic uncertainty people are trying to find the right balance between “cheap” and “luxury”. They’re willing to wait for — and invest in — more expensive purchases, but they’re looking for alternative ways to fit it into their budget.
That quest to get maximum value for their investment is driving consumers worldwide to start their holiday shopping early; in fact, more than half of shoppers are planning to hold off on buying gift items until they are on sale. Many are also open to trying something new. For example, Google data reveals that in July, to get a better price or deal due to rising prices, 36 percent of consumers said they purchased a brand that was different from their preferred brand.
To capitalise on these findings, marketing experts at Google recommend focusing on offering outstanding customer experiences, as “People who have positive gift-buying experiences tend to become repeat customers, even after the Black Friday frenzy dies down. This means retailers have a huge opportunity to give holiday shoppers a reason to return, which will drive profitability and long-term growth. It’s important, then, that retailers communicate their unique value and offerings to shoppers. For example, brands could showcase their outstanding customer service, help customers support causes they believe in, offer loyalty rewards, or provide a combination of all these benefits and more” recommend from Google.
Mega sales events and other shopping parties are a great way to connect with consumers as they get ready for their fashion and apparel gift shopping. Singles Day (November 11 or 11/11) started as an unofficial Chinese holiday which rapidly evolved into a major shopping event first and into one of the world’s largest mobile shopping carnivals then. Double-digit mega sale days — such as 10/10, 11/11, and 12/12 — are also becoming increasingly popular in Southeast Asia, per Google analysis.