3 Factors Influencing Consumer Behaviour in 2022

Now that Covid-19 restrictions have slowed down, certain aspects of consumer behaviour have transformed, and these changes are likely to stick around for the foreseeable future.

High inflation rates, a more intentional focus on personal wellness, and a growing concern for sustainability are 3 factors that have influenced consumer behaviour in recent years.

This article takes a deep dive into these factors to get a better understanding of how brands might need to adapt their way of thinking to align with the purchasing decisions of their consumers.

1. The Highest Inflation Rate in 30 Years

With the ongoing rise of inflation being at the forefront of consumers’ minds, the concern for personal finances and economic growth has played a role in consumer behaviour. According to Statista, global inflation rates have increased by 6.2 percent from March 2021 - 2022 with that trend continuing to rise, making it the highest in 30 years.

Despite this, inflation hasn't stopped consumers from spending-yet. In the US, consumers continued to open their wallets where inflation grew to nearly 8.5 percent in March 2022. There's been a similar pattern in NZ where consumers have also been slow to adjust their spending habits - but that’s expected to change as the reality of this significant increase sets in.

ASB chief executive, Vittoria Shortt, told RNZ that consumers were continuing to spend like they did when government and monetary stimulus was rolled out to support the economy. She also says that financial resilience is now more important than ever, suggesting that consumer behaviour needs to adapt to the higher inflationary environment and the pressure that comes with it.

With that being said, data released in March 2022 by Stats NZ highlighted a more measured response from consumers in terms of electronic spending. The data showed that seasonally adjusted electronic spending on core retail categories declined by 1.4% (-$72m) relative to February 2022.

Within the core retail category, it can be seen that the most significant movements were recorded in the Hospitality (-14.3%) and Apparel (-11.7%) categories suggesting that consumers were prioritising other categories when it came to their spending decisions.

Insights taken from Consumer Market Bites, a video series recently launched by PwC Australia, explored consumer trends and the economic outlook for the retail and consumer sector. The takeaways from the information gathered are relevant across the globe and show some interesting trends.

One key takeaway was that 51% of Australians are becoming more price conscious, with 57% hoping to increase their savings. Higher interest rates and mortgage payments will play a huge role in their spending, with consumers being more likely to put more money into these areas, as opposed to spending this money on products or experiences.

2. The Focus on Personal Wellness

In recent years, the concept of wellness has evolved and consumers have become more focused on how they can optimise their health and overall wellbeing. This concept has become even more important in certain aspects of life such as the type of food we eat, the products we use, and purchasing habits as a whole.

According to NielsenIQ, companies without a strategy in place to address these needs are likely to fall behind in 2022. With shoppers thinking more critically about every aspect of the brands they purchase, it’s more important than ever for companies to reassess how they operate. Aspects such as ingredients, sourcing practices, environmental impact, and functional benefits, are being scrutinised by consumers, and these factors are playing a significant role in purchasing decisions.

The rise in online shopping and ecommerce has made it even easier for consumers to check the finer details of what they’re purchasing with the goal of better fulfilling their wellness needs. Brands who haven’t considered these concerns are likely to miss out on potential sales by not fulfilling this need for additional information and social responsibility.

3. Environmental, Social and Economic Sustainability

Concerns around sustainability have also had an impact on purchasing decisions, with a growing number of consumers making sustainable choices more of a priority.

In the Consumer Market Bites video series, sustainability was mentioned as another key factor in changing consumer behaviour, where 44% of respondents said that they would make an effort to shop in a way that was more eco-friendly. 44% of respondents also said they were more likely to shop with local retailers, both online and physically, with younger generations especially focused on supporting smaller, independent retailers.

Not only are environmental sustainability factors like reduced carbon emissions, the use of recycled materials and a reduction of plastic waste likely to influence consumer behaviour, other aspects of sustainability have also come into play. Social factors such as supporting human rights and diversity, as well as supporting local communities are also becoming more of a priority for shoppers in 2022. Additionally, governance factors like being transparent and ethical, along with privacy and security concerns are becoming more and more important for consumers.

Some proven ways for brands to remain competitive in this space include highlighting and promoting sustainability efforts, growing consideration for pricing strategies, managing their offering to identify key value categories, as well as using their resources more effectively and efficiently.

With these 3 factors in mind, brands need to be more mindful of the growing concerns of their shoppers in order to retain or establish a competitive advantage. Not only this, but it’s important for companies to take a more flexible approach to strategies to embrace the changes in spending patterns and needs of their core shoppers.