Rising Prices Could Slow Consumer Spending

Nearly three- quarters (74%) of Americans  believe higher prices could slow their spending in the coming months, according to a new survey from Deloitte.

The survey found that mobile and social connections are helping shoppers make better buying decisions in the wake of the recession.

Households in the United States are citing events that could curb their willingness to spend.  For example, more than seven out of 10 (71 percent) respondents cite concerns about higher energy prices, up from 54 percent at this time last year, and nearly one-half (47 percent) point to higher medical costs. Additionally, 44 percent indicate political unrest in other countries as a factor that could cause them to lower their spending.   

While four out of 10 (43 percent) consumers surveyed feel the economy is still in a recession, Americans in higher income brackets appear to have a more optimistic outlook than those at lower income levels.  Nearly half (45 percent) of households earning $100,000 or more say their confidence in the economy has improved over the past six months, compared to 24 percent among those earning less than $100,000.

"Consumers continue to be resilient and give retailers reasons to be optimistic, despite their apparent lack of confidence in the economy," said Alison Paul, vice chairman and U.S. retail sector leader, Deloitte LLP.  

"With day-to-day expenses on the rise, retailers must be innovative and offer more than just low prices to attract customers.  By interacting more intimately with consumers through mobile, social media and other emerging platforms, and articulating a message of value and quality, retailers will do well with worried shoppers."

Consumers appear aware of recent changes in retail stores and are taking advantage of Web-based decision-making tools to seek out the best price, service and experience.

"The recession has redefined the consumer’s relationship with retailers, and social and mobile applications have accelerated this change," said Paul.  

"Consumers are making more deliberate, informed decisions using a variety of tools and data.  This presents a challenge and an opportunity for retailers to enhance both the in-store and online experience — knitting those together in a compelling way to build shopper loyalty."

Among survey respondents who own a Web-enabled smartphone (32 percent), more than four out of 10 (43 percent) said they have used it specifically in a store to assist in their shopping; 37 percent wanted to use their phones while in a store but couldn’t because of connectivity issues.  Additionally, four out of 10 (40 percent) consumers surveyed interact with retailers through social networking sites to find out about promotions, browse products, or review recommendations.

"Consumers are challenging retailers to be creative and deliver a multi-channel experience that stands out," continued Paul.  

"Many retailers are considering investments such as providing Wi-Fi connectivity in the store which is an excellent way to connect with the shopper at the right time during the buying process.  Of course, training for store associates needs to accompany these infrastructure changes to be sure associates are knowledgeable and ready for this more informed consumer."