by My very old and very wise Sicilian grandmother was a treasure trove of wise sayings. They were short, to the point and often profound.
One of my favorites from her was this one: “Life is a tough teacher. It gives the test, then the lesson.“
Another one hit me earlier this week as I was doing my weekly grocery run and noticed that the prices on just about everything in the store had gone up … again.
Clear as a bell, I heard her remind me that, “It is the little foxes that destroy the hen house.“
I remember asking what they meant. She told me that often in life, it was not only a major issue that caused a problem. Often, it was an ongoing smaller and nagging problem that also could negatively impact a situation.
So, as I filled my grocery cart with the food for this week, I found myself adding up how much each of the items I buy each week had gone up again this week.
After leaving the grocery store, I stopped to fill my car with gas and realized that the price of gas had jumped 27 cents a gallon from last week.
While I will be the first to admit that the bump in gas prices and the small but steady increases in the cost of my groceries are little foxes, those bites, while small in the grand scheme of my life, are causing me to be more cautious about bigger purchases that involve my disposable income.
And yes, that could impact furniture sales, especially when the consumers realize every time they buy weekly or monthly necessities it is costing them more.
I ran across a recent article from Elavon, which describes itself as “a wholly owned subsidiary of U.S. Bank that has been a global leader in payment processing for more than 30 years.”
The article looked at the impact that inflation is having on retail sales and concluded that inflation has impacted every corner of our economy this year with a surge in gas prices, higher interest rates and widespread food shortages.
Reacting to this ongoing inflation, Elavon concluded that consumers are modifying their spending habits and practices, especially when it comes to retail.
The paper identified five major ways shoppers are responding. What follows are the findings from the Elavon study.
1. Spending less
Recent studies have shown that 76% of buyers are spending less money. Entertainment and clothing are the main areas where consumers are cutting costs, prioritizing more essential needs. Businesses are less likely to be on the chopping block if they provide an irreplaceable value or experience to their customers.
2. Shopping less
Compared to the first quarter of 2021, consumers are expected to place 12% fewer orders globally in this year’s first quarter. According to Salesforce, because of the rise in prices, 51% of buyers intend to buy fewer holiday gifts this season. As shoppers try to stretch every dollar, retailers should consider offering holiday deals and specials. This way consumers feel like they’re getting more bang for their buck.
3. Shopping earlier
Even without gift shopping, the holiday season can be a stressful time of year. Many shoppers are trying to minimize their holiday stress by completing their holiday shopping early. According to research done by Salesforce, and based on sales activity for last year, 42% of the world’s shoppers plan on buying holiday gifts earlier than usual, and 37% of American shoppers plan on starting the holiday shopping season earlier this year. To get ahead of this trend business owners should have their holiday items ready as soon as possible.
4. Shopping in-store
Despite the rise in online shopping, American buyers have kept their steadfast love of in-person shopping. One of the main reasons U.S. consumers are still headed to brick-and-mortar stores is because they still greatly enjoy shopping in-person over buying online. In-person stores now influence 60% of online orders. If mom-and-pop shops still offer customers a physical opportunity to interact with their goods, they’ll still have skin in the holiday game.
5. Switching brands
Salesforce research shows that half of all consumers will switch to new brands this holiday season due to an increase in prices. So, an estimated 2.5 billion shoppers could swap their usual brand for a cheaper name-brand competitor or a generic brand to save money.
The study also offered a few suggestions for retailers hoping to minimize the negative effects of inflation.
The Elavon study suggests that retailers emphasize the value their brand gives consumers. The report noted that, “If shoppers are satisfied with a brand’s product, they are less likely to jump ship to another brand, especially if it’s of lower quality.”
The study also recommends that retailers prioritize customer satisfaction, both for in-store purchases and sales made online.
The report concludes that, “If businesses can maintain and increase positive shopping experiences, they are more likely to retain customer loyalty. A loyal and satisfied customer is much more likely to return to a retailer regardless of costs. It’s also important that retailers impress first-time shoppers with a positive experience to grow their consumer base.”
To me the takeaway is retailers must take small, but specific steps to keep those small, but potentially dangerous foxes at bay.
