Will consumers become even more frugal post-pandemic?

Discussion
Photo: RetailWire
Jun 30, 2022

A recent survey conducted on behalf of Ollie’s, the closeout chain, found 54 percent of Americans consider being called “cheap” a compliment at times and 53 percent are proud of being labeled a bargain hunter.

“We’ve never met anyone who doesn’t love a bargain,” said John Swygert, president and CEO at Ollie’s, in a press release.

The survey comes as the pandemic has seen an extended period of healthy full-price selling across many retail channels due in part to lean inventory levels tied to supply chain disruptions as well as the benefits of federal stimulus funds.

Other surveys have likewise explored whether the pandemic would result in a change in the frugalness many had embraced since the Great Recession.

A survey last December from wealth management company Personal Capital found that many people started to tighten their belts and adopt more frugal habits over the pandemic, whether that was out of necessity due to hardship or out of the fear of the unknown.

By the early months of this year, however, reports arrived that many Americans were finally emerging from the pandemic eager to splurge on everything from travel and sports events to restaurants, especially those able to trim their debt over the last two years amid record low unemployment rates across many states.

Inflationary pressures related to pandemic-driven supply chain disruption, however, have also been leading consumers to restrain spending in other areas.

According to a Forbes Advisor survey that came out in mid-June, a full two-thirds of Americans say they are dipping into their savings as prices for goods and services spike, including 31 percent who have substantially or completely drained their savings.

Jungle Scout’s “Q2 2022 Consumer Trends Report” found 59 percent of consumers buying less expensive brands to cut costs and 48 percent more likely to shop from a brand that has consistently lower prices.

A Washington Post article from June 18 found households cutting back on not only big-ticket purchases, but eating out, vacation plans and routine non-essentials such as manicures and home cleaning appointments amid rising prices and increased recession warnings.

Douglas Duncan, chief economist at Fannie Mae, told the Post, “The consumer is coming under stress.”

DISCUSSION QUESTIONS: Do you think consumers are likely becoming more frugal or less so post-pandemic? Do you see inflation, job/wage growth or some other factor particularly determining whether price-consciousness increases or decreases?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"At this moment (subject to change without notice) I'd say landing on the side of price consciousness increasing - at least for the near term - may be a solid bet."
"Inflation, inflation, inflation. This is not about the pandemic, but about frugal purchasing because of inflation."
"For any retailer (or brand) expecting a stellar holiday season or a bright spot for 2023, I’d suggest that enthusiasm be tempered."

Join the Discussion!

27 Comments on "Will consumers become even more frugal post-pandemic?"


Sort by:   newest | oldest | most voted
Lee Peterson
BrainTrust

This is interesting to watch/live through as there’s now so many new factors that have come into play. Not the least of which is work from home. Suddenly you need less gas, fewer “work” clothes, you have more time to find deals and there’s just less to buy overall (no lunches, etc.). Retail sales have been stellar through May so, let’s say “glass half full” here and think about a softer landing than in ’09-’10.

Bob Phibbs
BrainTrust

We’re tired. We want to treat ourselves. I just spent three weeks going down the California coast. I didn’t see frugality. I saw hedonism still going strong. I’m not saying everyone is feeling flush *cough 401k* but the media is trying to make a recession story. Take for example the much-shared line about Walmart selling more half-gallons of milk. The story was that people have to save. What is more likely is people don’t need as much milk at home as people who are out and about. And buying half-gallons is actually more expensive. There’s always another side to predictions – especially citing off-price retailers as a source.

Richard Hernandez
BrainTrust

Yes. We are tired and people I talk to are ready to burst if they don’t get out of the house. Do I pay more for gas? Yes. Did I lose a bug chunk of my 401k? Join the club. I don’t think the media will be successful in creating a recession narrative. And finally, from what I have seen, gallons of milk are still selling at a good pace in the Walmart stores I have been into lately.

George Anderson
Staff

It’s interesting the number of people I come across on an almost daily basis who say something along the line of “Let’s not talk ourselves into a recession.”

Ryan Mathews
BrainTrust

George,

Me too. Only problem? Talking doesn’t cause recessions. Market corrections do.

George Anderson
Staff

I agree but market corrections also include companies such as Hy-Vee, Netflix and Tesla laying off workers in anticipation of a recession. These types of actions when multiplied can lead to an economic downturn. It may not be exactly talking our way into a recession but it isn’t far removed. Thoughts lead to actions and what I’m hearing from some is that current corporate pessimism may have some basis in reality but that doesn’t make it reality itself.

Dick Seesel
BrainTrust

Although we’re at risk of a consumer-led recession, there is mixed evidence based on anecdotal behavior. The demand for post-pandemic “experience” is very high — especially air and car travel despite inflationary prices. On the other hand, demand for general merchandise seems to be waning and grocery shoppers are actively trading down. I’m just not sure the overall picture looks like dramatic belt-tightening just yet.

Peter Charness
BrainTrust

Need-based purchasing (closely followed by impulse buying perhaps) is the pillar of consumer spending for many retailer segments, particularly grocery. As returning to work grows, people’s needs change somewhat which should move the needle for some retailers. Consumer sentiment (on its way down now) will probably inhibit overall spend for now. So overall the media will talk us into frugality.

Christine Russo
BrainTrust

Shopping and planning events includes a price check now more than before this inflationary increase. But shopping is social and psychological so it will continue. Smart retailers will prepare by having diversified product. If you usually sold $250 denim, then bring in less of that and add a $150 denim to the assortment. Multi brand, soft goods stores are in the best position to be responsive.

Jeff Sward
BrainTrust

I’m thinking more frugal. Buckets and buckets of stimulus dollars and post pandemic relief gave us a spending spree. At some point, the new uncertainty and unpredictability of the future, coupled with a recession of some level, will lead to some belt tightening.

DeAnn Campbell
BrainTrust

We’re becoming, if not more frugal, at least more thoughtful about what and how we buy for a convergence of financial, environmental and health-related reasons. We want to minimize what ends up in a landfill and to create more breathing room in our homes now that we spend more time there. We’re motivated to conserve more resources by looming fear of recession and war, but also by today’s trend to find more meaningful work, even if that work earns less. Uncertainty is the enemy of retail, and global and domestic events today are certainly brewing up that uncertainty.

Patricia Vekich Waldron
Staff

Consumers are bifurcating – those that prospered during the pandemic are unleashing pent-up demand by purchasing higher-end experiences and those on the other end of the spectrum are struggling to keep up with rising costs by trading down on brands.

Brad Halverson
Guest

Spot on depiction of consumers right now. We have two different groups, experiencing two different realities.

Rich Kizer
BrainTrust

I think in one respect, price consciousness is waning as we (consumers) have educated ourselves on where to go to purchase specific categories items and when to do it. However conversations of companies such as RH add new angst to consumers. I think the bigger lesson is that consumers are telling us they will buy, when ready.

Gene Detroyer
BrainTrust

“Thirty-one percent who have substantially or completely drained their savings.”
That is an entire discussion in itself. YIKES!

One thing the pandemic taught many is the redefinition of the word “need.” The discovery that we could get along without the next new thing or fashion helped consumers look hard at what they thought they needed and what they really wanted to spend their money on. This rethinking will remain with a sizable portion of the population. It isn’t a matter of being more “frugal.” It is a matter of being more thoughtful and more satisfied with the use of their money.

Ken Morris
BrainTrust

Bargain hunting is built into our DNA, but so is splurging. While some shoppers are “cheap” by nature, others realize that higher prices mean lower discretionary spending. They’re the ones who will adapt, but temporarily, to economic change. I’ll come in on the side of more frugal, given the inflationary pressures, but the optimist in me feels that I could be wrong. We need to see where this worldwide market is heading. The U.S. is still a great place to park your fortune!

Ryan Mathews
BrainTrust

First of all, we are not quite to the post-pandemic stage as vaccinated and double boosted people continue to get COVID-19 and Monkey Pox is waiting in the wings. Next a good deal depends on the Fed. If interest rates continue to rise to stave off inflation we will see the second lever (increasing unemployment) starting to move. Higher interest rates and higher unemployment are traditional fixes for battling off inflation, but they aren’t all that good for retailers. And that’s not even beginning to factor in high gas costs and how long the Russians will continue battling in the Ukraine and disrupting the world petroleum market. At this moment (subject to change without notice) I’d say landing on the side of price consciousness increasing – at least for the near term – may be a solid bet.

Richard J. George, Ph.D.
BrainTrust

Frugality will be the new normal, at least until inflation cools and COVID-19 becomes less of a factor. I am reminded that some folks need to save on purchases, however everyone loves to save. Extreme value retailers and own/private label will be kings during this time period.

Mohamed Amer, PhD
BrainTrust

Consumers are becoming more price conscious given inflation and reduced Fed liquidity. It’s surprising to me that some are still believing that the increasing prospects of a recession is a media fabrication. Listen to Fortune 500 CEOs echoing economic concerns and the health of the consumer. By mid-July, Mr. Jamie Dimon will kick off the earnings season and update his warning about a “hurricane” coming our way from his early June investor conference comments. It’s about data, not narratives.

Doug Garnett
BrainTrust

The pandemic has been an emergent event throughout – where predictions have been a fool’s game. That truth continues as the pandemic eases. As a result, I’m suspicious of any broad based theories about how consumers might change. Retailers need to stay focused on finding products customers will value, presenting them well in their stores, and delivering them with good service. This is not a point where I recommend big bets on theories about a changed consumer.

Dave Wendland
BrainTrust

Economic pressures are becoming more and more apparent as consumers strive to make ends meet. We’ve all read of saving accounts being tapped, shifts and delays in spending, and the rise of budget conscious decision making. This IS NOT going away any time soon and, in my opinion, consumers will become more frugal in the coming months. For any retailer (or brand) expecting a stellar holiday season or a bright spot for 2023, I’d suggest that enthusiasm be tempered.

Shep Hyken
BrainTrust

Many people cut back on their spending during the pandemic when they lost their jobs or were deferred. Now we have inflation. Between the two, it makes sense that more people will “bargain hunt.” This is a cycle. It may take one or two years for the consumer mindset to stabilize.

Mark Price
BrainTrust

Regardless of how consumers prefer to be named, past behavior suggests that a large consumer segment tends to have a very short memory. For better or worse, consumers tend to react strongly to short-term indicators such as gas prices by either increasing or decreasing their travel and discretionary spending. Rising prices lead to pull-back, but when gas pricing reverts to close to what is considered normal, the rest of consumer spending goes back as well.

Ananda Chakravarty
BrainTrust

There are two segments untouched by the pandemic — the wealthy and the poor. The wealthy will continue purchasing at their regular pace, a shift from 1% of budget to 2% has limited real impact.

The poor will continue to scramble for whatever little they can find, through subsidies, coupons, thrift, second-hand and other means. They were unable to afford regular products and meals anyway, so the change will have little impact on how they find and purchase goods. Typically, thrift items won’t see a tremendous rise in price.

What I covered more thoroughly in a recent report is the impact to retailers and the need for price optimization during times of inflation. Essential goods can be treated differently. Price elasticity changes for mid-tier products means optimization is the primary avenue for retailers to address the issue.

Brad Halverson
Guest

Americans ride these waves of boom and bust (or belt tightening). Every time there is a shift to prosperity, it’s almost as if they ignore that the party will always comes to an end and will require learning being frugal again.

This time around as inflation takes bites out of the household budget, the old ways of saving are supported with new platforms and more affordable tech. Brands and retailers are armed with more ways to communicate savings, finding value. And consumers are more aware of how to navigate the waters better because they have access to more tools (apps, digital coupons, loyalty programs, Ecommerce) to help them save.

James Tenser
BrainTrust

There are three main constituencies of frugality — those who are desperate to economize, those who think they should, and those for whom bargain-hunting is a sport.
I think we are mostly talking about that middle group here. In grocery we see evidence that many shoppers are shifting their choices to less pricey proteins, more store brands, and a preference for ingredients versus packaged prepared foods or restaurant meals. Inflation is the prime factor.

Remember your “guns vs. butter” lecture from Econ 101? Right now the trade-off is more like “gas vs. steak.”

For what it’s worth, media coverage of inflation seems to be hammering home the message that folks should keep an eye on their budget choices. I don’t think that will slow consumers from patronizing Target’s markdown sales or Amazon’s Prime Day in the month ahead. Those purchases will feel like “bargains” to many, even if they are entirely non-essential.

Kai Clarke
BrainTrust

Inflation, inflation, inflation. This is not about the pandemic, but about frugal purchasing because of inflation. Until this is brought under control, the more frugal consumer will continue to reign supreme.

wpDiscuz
Braintrust
"At this moment (subject to change without notice) I'd say landing on the side of price consciousness increasing - at least for the near term - may be a solid bet."
"Inflation, inflation, inflation. This is not about the pandemic, but about frugal purchasing because of inflation."
"For any retailer (or brand) expecting a stellar holiday season or a bright spot for 2023, I’d suggest that enthusiasm be tempered."

Take Our Instant Poll

Will consumers likely become more or less frugal post-pandemic versus the pre-pandemic 2019 period?

View Results

Loading ... Loading ...