Cost-of-living crisis: Retailers need to go the extra mile ahead of the busiest time of year as discounting loses appeal
loading...
Retail
As brands and retailers prepare for the busiest time of the retail calendar, they'll need to go the extra mile to engage shoppers amid the cost-of-living crisis, as new research from WGSN Barometer reveals that discounting is losing its appeal.
Consumers in the UK and US feel they are getting less value for money, and discounting alone no longer entices them to visit retailers in-store and online.
Online browsing and word-of-mouth over discounts
Discounting loses appeal: according to the latest WGSN survey, only 24% of respondents visited a mass/trend-led retailer because it had a sale this year. Instead, online browsing and word-of-mouth are the top reasons to visit a retailer: 17% browsed items seen on their website earlier and 16% heard something positive from friends or family. Consumers perceive value and off-price retailers to be offering less value for money: only 22% of respondents associate a value/off-price retailer with “worth every penny”.
About the survey
- Data used for this report was collected across female and male respondents aged 16–74 across the UK and US from April to September 2023 and 2022
- Market segmentation: fashion brands and retailers are segmented by their reaction to trends and/or price point: trend-led retailers are those that are first to respond to trend, while mass market are those that don't lead the trends but follow them. Value retailers represent supermarket and other value brands and off-price retailers are retailers that offer significant discounts over retail price.
Gen Z stays less concerned
The younger the generation, the less concerned about the cost-of-living crisis: Boomers and Gen X are the most concerned about the cost-of-living crisis and their future, while 33% of Gen Z say they are aware of problems in the wider economy but it has not affected them much personally. Consequently, 28% of Boomers are taking action to buy cheaper brands and/or going to less expensive shops, compared to only 19% of Gen Z shoppers.
Price is a growing pain point for older generations: 39% of Boomers didn't make their latest purchase because of the price tag, and 17% of Boomers spent more than expected when they made a purchase. According to WGSN Barometer, 33% of Gen Z and Millennials say they're struggling to stick to their budget when making a purchase.
Consumer anxiety
Confirming a previous trend forecast called out in WGSN’s flagship report Future Consumer 2023, anxiety is a key emotion for consumers in 2023. A WGSN survey on consumer emotions found anxiety was the highest reported emotion, experienced by over 70% of respondents, aligning with the cost-of-living crisis and customer caution.
“As brands and retailers prepare for the busiest time of the retail calendar, they'll need to go the extra mile to engage shoppers during the Christmas season and especially in January, when the majority of discounting will take place. The ongoing uncertain economic landscape will require brands to double down on value, entertainment and joy-filled services across every consumer interaction,” said Laura Saunter, Senior Strategist at WGSN Insight.