Kearney Consumer Institute Q1 2023 Briefing Analyzes Global Inflation-Driven Consumer Trade-Off Behaviors

• 69% of consumers are reducing spend in one category to spend in another
• 64% acknowledge that prices are going up, but are still buying the same goods and services they have in the past 6 months
• Only 34% of consumers see the shopping trade-offs they make as "downgrades"
• 30% see cooking a nice meal at home as an upgrade from eating out

CHICAGO, Feb. 21, 2023 /PRNewswire/ -- Today global management consulting firm Kearney's consumer think tank, the Kearney Consumer Institute (KCI), releases its Q1 2023 briefing on gifting, Should I stay or should I go? Redefining trading down, trading off, and consumer shopping decisions. The report looks into the nuanced trade-offs consumers are making in response to the inflationary economy, as well as how retailers and brands can think about consumers in the new belt-tightening environment.

"Making adjustments to their spending patterns is not a trend for consumers, it's speaking to a longer-term reality," said the report's author Katie Thomas, who leads the Kearney Consumer Institute. "The concept of trading down can best be explained as the convergence of quality and optionality, loyalty and brand switching."

"Trading down is an inherently negative concept, implying a cheaper product or lower quality. But it can also mean willingly buying less, cutting back on or eliminating products or categories, intentionally shopping at discount retailers, reducing spend in other parts of the wallet," noted Thomas. "Retailers and brands need to take a less judgmental look at what consumers are experiencing."

The KCI has been exploring how consumers perceive trading down, trading off, and new brands and categories when prices are rising.

The briefing addresses themes such as:

• Increasingly low switching costs leads to constant consumer evaluation of quality.
• The concept of trading down can create confusion.
• Consumers see many of their shopping choices as neutral, rather than trading up or down.
• Consumers make personalized trade-offs to enable themselves to spend as they see fit.

The study reports on feedback from consumers, making the case that consumers themselves don't see trade-offs as inherently positive or negative. And prices aren't the only reason people switch. "Many consumers like to try new products," noted Thomas. "They're faced with a lot of options. They might switch because a friend recommended a different product, or because there was a stockout on what they were looking for, or because they were browsing online or in the store."

Consumer choices are far more complex and nuanced than is usually assumed. The KCI advises a deeper reflection on why people are switching, and how it relates to product attributes and perceived quality. This could include reframing questions, evaluating assumptions (including that consumers will return), and confronting tough questions.

"We've seen consumers consistently evaluating all the options they have," said Tanya Moryoussef, a manager in Kearney's consumer practice. "Right now, we have a complex economic environment with inconsistent indicators, but consumers are taking it in stride and making decisions that work for them. Retailers need to work harder to meet them where they are."

A copy of the Q1 KCI Briefing Should I stay or should I go? Redefining trading down, trading off, and consumer shopping decisions is available here.

About Kearney

Kearney is a leading global management consulting firm. For nearly 100 years, we have been the trusted advisor to C-suites, government bodies, and nonprofit organizations. Our people make us who we are. Driven to be the difference between a big idea and making it happen, we help our clients break through.

About the Kearney Consumer Institute

The Kearney Consumer Institute (KCI) evaluates today's business challenges and opportunities through the eyes and experiences of consumers, advocating a consumer-first perspective. By leveraging consumer behavior data and insights, we generate conversation, and ultimately action, around how to address consumer needs with meaningful benefits. Through extensive consumer market research, we can help you identify the right opportunities by surfacing key consumer market insights and trends.

Using a consumer-first lens the KCI looks at today's consumer revolution not by thinking about consumers, but by thinking like consumers. Our consumer-centric approach includes simple, precise, plain-language conversations on topics like trends, consumer communities, convenience, loyalty, service, fair pricing, and product development and technologies.

U.S. Media contact:
Meir Kahtan, MKPR, [email protected], +1 917-864-0800

SOURCE Kearney