Consumers are hurting financially—here’s how your brand can adapt to keep up
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What if a strong U.S. economy doesn't boost consumer confidence? Discover how brands could adapt through transparency, value creation, and ongoing research.
Inflation is falling. The labor market is strong. And the US economy is growing at a healthy 2.8% annual rate with consumer spending up to a 2.3%, up from 1.5% in Q1.
Still, there are signs that consumer confidence in the economy is down.
This week, McDonald’s posted their first decline in US comp sales since 2020 for Q2. And the fast-food brand isn’t alone - Starbucks is also seeing declines in sales.
Consumer tech sales are expected to continue to fall in the second half of the year.
Consumer sentiment about the economy is low—especially for lower-income consumers.
So, what’s driving the disconnect?
High prices: With everything from Diet Coke to cell phone plans increasing in price, consumers are noticing the increase. Inflation is a force of nature that brands simply can’t escape—causing many to raise their prices just to stay afloat. At the same time, consumers have negative attitudes toward brands they perceive as leaning into “greedflation”.
Shrinkflation: When products are downsized but still cost the same, consumers notice, as Chipotle found out. And it affects their brand perception. New bills are even aiming to stop the impact on consumers.
“Upflation”: The phenomenon has created entirely new product categories—like whole body deodorant or specialty razors that usually cost more than “regular” versions of the product.
Consumers are struggling. Earlier this year, Suzy found that about half (47%) of consumers are stressed about their finances. Inflation (45%) and unexpected costs (41%) were the top reasons why. As a result, consumers are beginning to cut back on spending, and are becoming more discerning about what they do decide to buy. Spending $5 on takeout coffee or $10 on a fast-food meal may not be worth it to consumers anymore.
So, what can brands do to meet consumers where they are? How can brands adapt to troubling economic times, while remaining profitable? Here are four tips to help brace your brand for the financial future while keeping your consumer relationships intact.
1) Be Transparent
Things aren’t going to slow down anytime soon with grocery prices expected to grow another 2.2% in 2024. It’s critical to let consumers know why this is the case. In an effort to cover up their increasing costs, brands will often resort to using cheaper packaging, decreasing their item counts, relying on cheaper ingredients, and other money-saving methods. However, what many of these companies don’t realize is that today’s consumers see right through these tactics.
To build and maintain trust, transparency is essential. In our research, we found that authenticity and transparency impact consumers’ perception of a brand, with consumers saying these factors build trust (68%), increase loyalty (60%), and enhance credibility (61%). Most importantly, nearly half of consumers (49%) said that authenticity and transparency influence their purchase decisions—with 58% of consumers saying it increases the likelihood of their purchase.
Brands should openly communicate the reasons behind price increases and any changes to their products. This can be achieved through clear labeling, honest marketing messages, and proactive customer engagement. By explaining the factors driving cost adjustments, such as rising raw material prices or supply chain challenges, brands can foster a sense of understanding and loyalty among consumers. Transparency not only enhances brand credibility but also helps consumers make informed choices, ultimately leading to stronger, more authentic customer relationships.
2) Create Value
Even McDonald’s admitted that high prices put off their customers, and are looking for new ways to create value with their $5 meal plan. Retailers like Target, Walmart, and Amazon all dropped prices to lure back customers.
In Suzy’s research, 60% of consumers said competitive pricing is one way a brand can stand out from its competitors. If your brand is based on value offerings and targeting discretionary spenders, it’s time to sweeten the pot. This could mean offering coupons or driving discounts, but it doesn't stop there. Consider bundling products for a better deal, implementing loyalty programs to reward repeat customers, and hosting special promotions or flash sales to create a sense of urgency.
Additionally, enhancing the perceived value of your products through quality improvements, exclusive offerings, or unique experiences can make a significant difference. Communicate these value propositions clearly through targeted marketing campaigns, and leverage social media to reach a broader audience. By proactively adapting your strategy to provide more value, you can attract and retain cost-conscious consumers even in a challenging economic climate.
3) Build Your Audience
Adding to your audience, especially with higher spenders, can help brands offset the potential loss of existing customers. Right now, many consumers are switching to white label products to save money.
To help counter this, brands need to engage with consumers on a more personal level—and the best way to do that is through consumer research. Brands should leverage data to understand consumer behaviors—including any changes in attitude, sentiment, or shopping habits. Your research can also help you understand their preferences and spending patterns.
Ad testing is also a good solution for understanding what kinds of marketing efforts will resonate with different segments of your target audience. For example, higher spenders may appreciate exclusive offers, premium product lines, or personalized shopping experiences. On the other hand, you may be able to drive lower-income shoppers to shop with promotions, BOGOs, and other sales tactics.
4) Don’t Skimp on Research
When consumers start tightening their wallets, it’s tempting for brands to do the same. But research is critical to understand why consumers do what they do—and can you quickly address any reasons they may not be shopping with you? Before “upflating” to catch a few extra dollars, you can determine if there is a demand for the product. That’s better ROI than just throwing expensive products at the wall to see what sticks. Additionally, you can test messaging around dynamic pricing, so you can more effectively communicate why prices may go up during certain times.
The Suzy Difference
With Suzy, you can quickly and effectively gather comprehensive consumer insights, ensuring your content strategy is robust, data-driven, and aligned with market expectations. Our platform provides on-demand access to a diverse, engaged audience, enabling you to test concepts, messaging, and pricing strategies cost-effectively and in real time.
With Suzy, you can:
Gain unfiltered, unrestricted access to premium, proprietary audiences.
Reach niche audiences to engage brand loyalists or general category enthusiasts—ensuring that every message is as relevant and impactful as possible.
Run attitudes & usage studies to gauge how consumers perceive your brand and products compared to your competitors.
Evaluate new ideas and concepts with real consumers before full-scale implementation—and understand why each resonates. Test up to 10 concepts with only 1 credit using our monadic methodology.
Rapidly go from quant to qual to understand the why behind consumer behavior changes.
With Trackers, refine, refocus, or stay the course by tracking changes in consumer behavior over time to anticipate upcoming shifts.
Iterate and dig deeper with your consumers through retargeting for constant, actionable feedback.
And so much more!
With Suzy’s powerful insights and flexible research capabilities, your strategy will be not only data-driven but also deeply aligned with consumer expectations. This reduces the risk of costly errors during a time of cutbacks and ensures that every decision is backed by robust data and real-time feedback. By understanding and anticipating market trends, including discretionary consumer behavior, you can confidently steer your business toward success.
Ready to learn more about our consumer research platform? Book a demo with our team today to start adapting to consumers and meeting their needs.
