With an economic slump, higher interest rates, and prolonged inflation, higher interest rates, it’s no surprise that customers feel more stressed while purchasing products and services. And, with the holiday season in full flow, many people are reconsidering their spending habits even more than they were before.
According to an Accenture study, 60 percent of customers believe their priorities constantly shift because of economic, social, and political upheaval. In addition, consumer behaviors and views change due to shopping trends and economic uncertainties. As a result, consumer spending and inflation are the two most important factors for retailers, and a thorough grasp of both can help your business and your customers.
Consumers Are Turning to Alternative Methods of Payment
The impact of inflation is changing the way consumers pay for products and services. More and more consumers prefer installment-type payment options over buy-now, pay-now ones. In fact, according to research, 71 percent of consumers have purchased items online since the Coronavirus pandemic, with 51 percent currently using a buy-now, pay-later payment option.
The same research also states that PayPal Credit is the most popular buy-now, pay-later service among consumers, with 57 percent of users, followed by Afterpay at 29 percent.
Ultimately, as consumers get more comfortable with installment-type payment options, we anticipate that loyalty perks similar to credit cards will emerge as competition for the consumer wallet heats up.
Purchasing Interests Are Changing
Another common impact of inflation on consumer purchase decisions is changing buying interests. Consumers now resort to physical assets such as bonds, commodity stocks, and real estate to protect their wealth. These assets may rise or remain the same value even during economic instability.
Shoppers are also investing in high-end items. They are doing this to have assets that can be liquidated during difficult economic times. After all, luxury items have good resale value compared to cheaper products.
How Companies Can Plan for Changing Consumer Behavior
Despite the numerous hurdles businesses face nowadays, they must employ various solutions to minimize the impact of inflation and assist customers in overcoming their pain points.
Customers eventually require simplicity under the pressures of life circumstances and the confusion of daily existence. As a result, they are drawn to anything that cuts through the clutter and simplifies their decision-making and lives.
To achieve this, businesses can utilize data, artificial intelligence, and expert input to assist them in creating links between their customers’ requirements and the external life factors that influence them. But, simultaneously, they must simplify from the inside by prioritizing customer experience and catering to their ever-changing needs and requirements.
Ultimately, the impact of inflation on consumer purchase decisions is changing how companies do business and sell products and services. If demand stays volatile, supply remains tight, and unemployment remains higher than pre-pandemic levels, we may all be heading toward stagflation. So, in the face of ever-changing consumer expectations and global trends, businesses must learn to adapt and remain agile to ensure they fulfill consumer demands!