Consumers grow cautious: A look at how they navigate inflation

Higher food prices, higher gas prices, an unsettling resurgence of COVID-19 variants, increased costs of utilities, and an impending recession — what’s a consumer to do?

U.S. shoppers are grappling with a host of disruptions in their daily lives, impacting how they live and shop. In fact, 8 in 10 U.S. consumers said they have changed the way they shop to manage expenses, according to a NielsenIQ Consumer Outlook Survey.

Some of the ways they’re managing the economic strain: stocking up when items are on sale (50% of survey respondents), using coupons (42%), seeking out stores with lower prices (38%), buying private label products (37%), and only buying essential goods (31%), according to a May 2022 NielsenIQ Homescan survey. The study reported that the average consumer is implementing 4.6 strategies to save money, and above are the top 5 ranking tactics.

It’s all in an effort to navigate disruption. NielsenIQ also released an infographic, “Navigating Disruption: State of the U.S. Consumer,” highlighting the concerns among shoppers in today’s economic climate and how different shopper groups are managing the strain.

Shoppers under duress

Make no mistake, the state of the U.S. consumer is a rough one. A June 2022 NielsenIQ Consumer Outlook Survey ranked the top five concerns facing Americans: rising food prices (38% surveyed), rising gas prices (22%), the economic downturn (21%), COVID-19 resurgence (20%), and the rising cost of utilities (16%). 

These issues significantly impact how they shop. Consider rising gas prices: a NielsenIQ Homescan survey found more than a third of shoppers are driving less, a quarter are shopping more online, and 24% are shopping closer to home. And, overall, Americans are buying less.

NielsenIQ reports for the 26 weeks leading up to July 2, 2022, year-to-date dollar growth was up 7.5% across total CPG sales, yet the number of units sold decreased by 2.5%. The gains in the industry are due to rising prices since sales units are soft.

This doesn’t inspire confidence in the American consumer, especially since CPG prices may continue to rise. Across total CPG, as of Q2 ‘2022, the average unit price change increased more than 11% compared to a year ago. 

Strugglers to Thrivers, grouping American shoppers

To see how the economy is impacting specific shopper groups, NielsenIQ has broken them down into five groups:

• Strugglers — shoppers who have suffered financial insecurity and continue to do so today.
• Rebounders — shoppers who experienced income or job loss but now feel they’re bouncing back.
• Cautious — shoppers who didn’t feel a financial impact but are cautious about spending and preparing for the worst.
• Unchanged — shoppers who haven’t been impacted and continue to spend the same way they always have.
• Thrivers — shoppers who saved their money and feel more financially secure.

How America falls into these groups has changed heavily when looking at the month of December 2021 vs. June 2022, per NielsenIQ and its Consumer Outlook Survey. Gauging the spectrum from Strugglers to Thrivers, the biggest change is in the middle, where the Cautious shoppers reside. The shopper breakdown in December 2021 looked like this:

• Strugglers 25%
• Rebounders 16%
• Cautious 33%
• Unchanged 18%
• Thrivers 8%

By comparison, the shopper groups have altered a bit as of June 2022, due to the impacts of COVID-19 softening but economic concerns rising:

• Strugglers 17%
• Rebounders 11%
• Cautious 42%
• Unchanged 23%
• Thrivers 7%

It’s evident in the middle of the spectrum that fewer shoppers are rebounding from a financial hit and more shoppers are being more careful with how they spend their money. It’s a direct correlation to American consumers feeling less confident today about their situations than more than a year ago.

That said, looking closer at the U.S. shoppers deemed Cautious, NielsenIQ suggests these shoppers, while being extra conscious of where their dollars go, do have an ability to spend money. It’s up to brands to leverage data and target these shoppers through an omnichannel lens, meet them where they shop in-store and online (do they like pickup or delivery?), and present offers and packaging sizes that have long-term value for a stock-up buyer, for example.

One signal that cautious consumers are willing to part with their money, NielsenIQ data for the 52 weeks ending July 2, 2022, found despite pricing pressures, shoppers are buying more products without a promotion compared to products bought on promotion.

NielsenIQ is the leader in providing the most complete, unbiased view of consumer behavior, globally. Powered by a groundbreaking consumer data platform and fueled by rich analytic capabilities, NielsenIQ enables bold, confident decision-making for consumer goods companies and retailers both large and small. For more information, visit NielsenIQ.com.