Shopper Forecast 2022
Laura Saunter – WGSN
Evolving 2021’s affordability advocates, consumers will be even more frugal in 2022, looking for value at every touchpoint. Facing a future without stimulus cheques and with product shortages, inflation and supply bottlenecks causing price hikes, they’ll be keen on deals and promotions.
Behaviours: despite a world of trouble, consumer spending was up in 2021, fuelled by government stimulus, pent-up demand and staying at home. As we move into 2022, the pendulum is swinging back the other way, with stimulus dollars gone and the Holiday buying spree over. US inflation reached a 30-year high in October 2021, increasing 6.2% over 2020, while the cost of items such as electronics, clothes and furniture is set to jump more than 10% this year, with traditionally low-cost retailers including IKEA putting prices up. This means onsumers will be doubling down on ultra value for the long haul. More than twice as many shoppers say they plan to spend more money at value chains in the next five years compared to 2020, while over 50% in a global PwC survey said they became more price-conscious in 2021.
Priorities: high prices will prompt more consumers to opt for cheaper, essential options and lead to a reprioritisation of spend. While last year’s affordability advocates were all about savvy savings and finding low-priced products that don’t scrimp on quality, ultra-value seekers prioritise deep discounts, cutting down on the number of items they purchase and trading down to cheaper, private label brands. However, hunting out extreme deals and slashed prices means their consumption patterns are often not in line with sustainability efforts.
Ultra-value seekers at retail: dollar stores are growing in popularity in the US. Transactions at Dollar Tree, Dollar General and Five Below saw a 65% increase in 2021 compared to big-box retailers such as Target and Walmart, where transactions were up only 38%, according to data from Facteus. People are also using online shopping tools to hunt down daily discount codes, using browser plug-ins or short-term social media promotions to get their fashion fix cheap, delivered free and fast. Shopping tools available on Google offer personalised recommendations, enabling consumers to find a cheaper alternative. Social media also serves as a powerful tool for value seekers. Alanya Williams has amassed 282k TikTok followers for his Thunder/Dollars videos showing viewers how to make dinner with five ingredients bought at Dollar Tree for $5.
Savvy discount hunters are turning to dedicated sites where retailers are marking down overstocked products that were bought in bulk to avoid shortages amid the shipping crisis, like Lululemon’s We Made Too Much.
Despite the best intentions of consumers to reduce their environmental impact, inflation-busting prices across fast-fashion retailers such as SHEINand Boohoo have skyrocketed their popularity among value-conscious Gen Z. Misspap offers 99p annual VIP membership, providing unlimited free next-day delivery on £10 dresses across the year, while Nasty Gal is extending a 90% discount to students and hosted a 99% off flash sale on Black Friday 2021, a move mirrored by Boohoo and PrettyLittleThing. For those struggling with rising prices, the opportunity to buy a quick, new outfit for a night out can be a welcome relief from life’s pressures. These feelgood moments and associated social media posts create a positive sentiment that seems more appealing than guilt about throwaway culture.
Despite the best intentions of consumers to reduce their environmental impact, inflation-busting prices across fast-fashion retailers such as SHEINand Boohoo have skyrocketed their popularity among value-conscious Gen Z. Misspap offers 99p annual VIP membership, providing unlimited free next-day delivery on £10 dresses across the year, while Nasty Gal is extending a 90% discount to students and hosted a 99% off flash sale on Black Friday 2021, a move mirrored by Boohoo and PrettyLittleThing. For those struggling with rising prices, the opportunity to buy a quick, new outfit for a night out can be a welcome relief from life’s pressures. These feelgood moments and associated social media posts create a positive sentiment that seems more appealing than guilt about throwaway culture.
Key strategies: curating product ranges around value schemes is an essential strategy as shoppers seek extreme deals. In October 2021, beauty brand e.l.f. Cosmetics met demand for more affordable products via a Holiday gift guide highlighting make-up under $5. Shoppers could quickly and easily browse and purchase items in minutes, dramatically increasing conversion rates.
PrettyLittleThing helps shoppers avoid feeling overwhelmed by navigating them through a large volume of low-priced SKUs with different entry points into browsing. The menu bar gives direct access to smaller proportions of products aligned to common search terms or filter options, such as single-click access to items under £10.
US discount store Five Below caters to young shoppers with social media sharing and thrifty sensibilities in mind. Five Below hauls are becoming common on platforms such as TikTok and YouTube, with Gen Zers sharing the unique items they found at $5 or less, most of which are only available in-store for a short time. The retailer’s treasure hunt-like shopping experience and Instagrammable products are driving an expansion effort, with 34 new stores across 19 states in Q2 2021. A focus on its key demographics of Gen Z to Gen X has led to a loyal consumer base. The average Five Below customer shops there 10 times a year, purchasing $150 of goods, which is about 60 items.
Upgrade digital selling tools to add value
Coupon shoppers spend 24% more on average, according to a 2021 US research by SpendMeNot, and 74% of consumers follow retailers on social media specifically to hear about discount codes. Among US Millennials, 89% would try a new brand if offered a discount code, according to 2020 research by Statista.
Dollar Tree is leveraging digital to aid these value-conscious shoppers. Alongside its coupons on customer devices, digital features include a shopping list tool, cart calculator and budgeting software. DG GO!, Dollar General’s scan-and-pay mobile app, has 4 million active users who can browse products, consult their budget and pay for items without using the checkout. An omnichannel experience with integrated value allows customers to spend without feeling out of their depth.
Gamify the value experience
Leverage the addictive nature of gaming to build experiences that keep people coming back. Global value e-commerce retailer SHEIN layers coupons and discount codes throughout social media and its own site, encouraging customers to keep browsing to uncover ‘easter eggs’. Many of the discount codes are time-restricted, with the short window ticking away on screen, building excitement as shoppers fill their cart. SHEIN’s 2,000 new daily SKUs build on a bargain hunt-like experience, with TikTok channels dedicated to sifting the best new additions and users sharing hauls of cheap clothing.
These sale periods are exciting events for the value shopper. To boost anticipation ahead of its #PinkFridayWithPLT, retailer PrettyLittleThing posted count-downs across platforms. The sale experience is gamified as shoppers hunt for discounts and share hauls on TikTok, with tops on sale from 10p and some dresses available at 100% off.
Capitalise on the private label boom
During the pandemic, supply issues, hoarding and economic pressures drove sales of private label brands. A sector defined by value and convenience is being reshaped for the next generation, with parent brands levelling up on quality, creativity and innovation still with price-conscious shoppers at the heart. UK retailer John Lewis is diverging from its longstanding premium retail strategy with a more accessible everyday private range. Called Anyday, it extends to 2,400 products across homeware, technology, baby care and baby clothing, with prices about 20% lower than its flagship collections. The more accessible price point allows the retailer to target younger customers and families seeking more affordable branded products.