Will 2022 be the year of trading down at retail?
The cost of everyday products has risen more in the past year than the incomes of average Americans, leaving consumers searching for ways to save money on their purchases.
A Wall Street Journal article points to ways that shoppers are seeking to stretch their dollars, including purchasing items in bulk, using coupons or buying on sale, and trading down to lower cost private label or value brands. Cherry-picking is growing as shoppers search out deals.
Government stimulus checks that bolstered Americans at the outset of the pandemic have ended and Congress has not moved ahead with continuing the 2021 Child Tax Credit payments that were particularly important for working class and middle income families.
Workers across the U.S. are finding that raises they’ve received over the past year have not been high enough to keep up with the rising cost of food, fuel and housing, reports The Washington Post. Wages for hourly employees fell 2.4 percent last year when adjusted for inflation, according to the Labor Department.
The ability to pay for goods is top of mind for a growing number of Americans. A Monmouth University poll released last month, ABC News reports, found the percentage of Americans concerned about paying everyday bills (15 percent) and inflation (14 percent) was more than triple (eight percent) the rate of top personal finance concerns when the same question was asked in August 2020.
The inflation rate has been fueled by a combination of factors tied to the pandemic, such as extremely high consumer demand, product shortages tied to supply chain disruptions and companies seeing opportunities to boost their bottom line results.
Major consumer brand companies have been public about their plans to raise prices on popular products in 2022 and retail executives have said in a number of forums that they expect continued cost pressures.
There are, Business Insider reports, some signs that the economy may be cooling. December’s retail sales were down 1.9 percent in December following a record November.
Concerns about the large economy and their own personal finances may also affect Americans’ willingness to spend in the months ahead. The University of Michigan Consumer Sentiment Index’s preliminary January report fell significantly, with three-quarters of those surveyed citing inflation as a bigger problem than joblessness.
- Surging Food Prices Turn More Shoppers Into Bargain Hunters – The Wall Street Journal
- ‘That raise meant nothing’: Inflation is wiping out pay increases for most Americans – The Washington Post
- How sky-high inflation is evaporating Americans’ savings, imposing ‘cruelest tax’ on the poor – ABC News
- Both halves of the US’s inflation nightmare are starting to look better – Business Insider
DISCUSSION QUESTIONS: Do you think that inflation will have a significant impact on consumer purchasing in the first half of 2022? What are the keys to retailers maintaining or building market share during an inflationary period?