The fear of a potential U.S. recession is having a real impact on how consumers will spend their money this season.
That’s according to a report from retail analytics and price optimization firm Intelligence Node, which found that 49% of U.S. consumers plan to cut back on holiday spending (with 51% currently cutting back on spending overall for the seasonal time period) in preparation of a potential recession. Compounding the issue are new trade tariffs imposed by the Trump Administration on Chinese goods, specifically.
The Dec. 15 tariffs would impact items including video game consoles, computer monitors, Christmas decorations and more. Intelligence Node’s research found that existing tariffs are already impacting consumer spending, with 31% of consumers saying that new tariffs on goods from international markets have impacted their spending habits, and 35% saying they have noticed changes in the prices of products they frequently purchase following tariffs imposed on Chinese goods.
“Retailers will need to be more strategic than ever this year in order to win competitive sales to wary U.S. consumers,” said Sanjeev Sularia, CEO, Intelligence Node.
Results also showed that, in the event of a recession, consumers are most likely to cut costs in the clothing, footwear and accessories, phones, laptops and tablets, and home décor categories. Some retailers will have it easier than others. Pet supplies, for example, is a category that consumers are less likely to cut back on in the event of a recession.
In other highlights from the report:
• Thirty-six percent of consumers will only buy their preferred brand when it’s on sale or when they have a coupon;
• Seventy-two percent are likely or very likely to stray from their favorite brand to get a better price;
• More than half of consumers price compare when shopping online; and
• Sixty-eight percent say price-comparing has helped them save more on purchases than any other strategy.
“Our data shows that brands cannot rely on consumer loyalty or having a superior product – consumers will always look at price and are not afraid to switch to another brand or offer if the price is better,” Sularia continued. “Consumers are constantly comparing prices before making purchases, meaning brands cannot afford to guess whether their price is best. It’s critical for brands to have price optimization technology on their side if they want a chance at capturing their share of revenue from this year’s reluctant consumer shopper.”