Consumer Confidence Changing Buyer Behavior

It's the question on everyone’s mind these days:

“How do consumers feel about the current fiscal environment?”

The short answer is ... wary. The Conference Board’s Consumer Confidence Index dropped a few points to its lowest in almost a year (101.3) in April, while the Present Situation Index rose to 151.1 Generally, scores above 100 indicate a positive outlook on the current economic environment. But when viewed with the Expectations Index (68.1),2 the scores suggest consumers are uneasy about the financial future.

Consumers have mixed feelings about business, labor, and income.

Overall, consumers thought business conditions and the labor market improved in April. But not all agreed. The largest swing was between those who think jobs are plentiful and those who don’t. Opinions on the state of business (“good” vs. “bad”) were similar.

Source: The Conference Board, “US Consumer Confidence,” April 25, 2023

When asked about prospects for the next six months, all consumers were less positive than in the previous month. The percentages who anticipate improvements dropped, while those who expect a worsening economy increased.

Source: The Conference Board, “US Consumer Confidence,” April 25, 2023

Fearing a recession, consumers are adjusting buying behavior.

Inflation is dropping but still high, along with interest rates. Prices are also rising. And there is still talk of a possible recession. That worries consumers, especially those who have yet to recover from the economic impacts of the pandemic. Thirty-nine percent of consumers feel they are financially worse off than a year ago, and expect they’ll spend more for grocery (71%), utilities (68%), and fuel (68%).3 Moody’s Analytics estimates consumers are already spending an extra $371 per month.4

The Consumer Price Index for everyday essentials like transportation (13.9%), energy (9.2%), food (8.5%), and shelter (8.2%) has continued to increase.5 Price-conscious consumers are feeling the pinch and looking for relief. A recent Gallup survey asked consumers what they are doing to cut costs. Responses ranged from reducing overall spending to buying cheaper items.

Source: Gallup, “Inflation Now Causing Hardship for Majority in U.S.,” September 7, 2022

Eight percent of consumers are staying home and reducing entertainment costs so they can allocate more money to necessities. Others are also looking for ways to increase income, including additional hours or second jobs.6

Credit cards fill the gap.

Consumers are trying to reduce expenses, but still must meet financial obligations. Many are relying on credit cards to make essential purchases (49%).7 Forty-five percent of Americans are carrying $1,000 - $5,001 or more in credit card debt.8

Even with higher expenses, travel is a reward for some.

About 25% of consumers aren’t planning to travel in the next few months due to escalating costs. But those who view travel as a reward are refusing to allow high prices to keep them home. Forty-six percent plan to visit a destination further than home, 36% will take a long trip, and 31% will “treat themselves” to a travel upgrade in the next three months. Other splurges will include full-service airlines (37%), paid destination experiences (46%), and restaurant dining (37%).9

Attract customers with four simple tactics.

Now is the time to really know your customer – beyond just demographics. What do they typically buy? How has that changed? Even in tough times, you can attract and keep customers when you align your business strategies with buyer behavior.

1. Know how and where consumers shop.
   It's common for consumers to bounce from mobile apps to websites, to physical stores before they ever make a purchase. And in between, they're on social media asking friends for recommendations. So, it’s important to know the spaces your customers and prospects frequent and create a connected, omnichannel experience that keeps your business top of mind.


2. Offer discounts and incentives.
   Most consumers are looking for a good deal, and brand loyalty is softening. If you don’t usually offer print and/or digital coupons, or special pricing to do so now could tip the scales in your favor.


3. Accept a variety of payment options.
   Consumers now have multiple payment methods at their disposal, including digital wallets, cryptocurrency, peer-to-peer payment apps, and buy now, pay later. Be sure you can accommodate any payment method and channel they choose whether online, mobile, contactless, or unattended options. An all-in-one payment gateway with consolidated channel management, supported by your bank or merchant services provider, can help easily integrate multiple payment methods for your business.


4. Build positive word of mouth.
   Consumers take review scores very seriously – 60% think the number of reviews is important and 49% trust them as much as a personal recommendation.10 Deliver a positive customer experience, then encourage patrons to leave reviews to share with others. Remember to also carefully monitor your business’ scores and reply to feedback in a timely, professional manner. An integrated customer engagement solution can provide the customer analytics to support best practices and simplify social channel monitoring.

Consumers are making the most of available funds. Be sure you are aware of the buying behaviors that will lead them to your business. For a complimentary review to identify opportunities you might be missing, simply complete a short form and a Synovus Merchant Services Consultant will contact you with details. You can also visit a local branch to learn more