Christmas Presents, Travel and Eating Out: How is Inflation Impacting Consumer Spending?
Over the past few months, we’ve been polling consumers across Germany about how they are adapting their spending due to inflation, and what they expect from brands when it comes to transparency around price increases. This month, we wanted to dig deeper into where exactly consumers are cutting back on spending – and where they’ll continue to spend the same or even more.
Read our ultimate guide to marketing in a crisis
In crises, it’s never more important to think long term and plan how your brand will navigate these headwinds. But that does not mean tightening your belt is the only way.
DCMN’s Insights team surveyed a nationally representative sample of 2000 consumers across Germany, and the results paint a clear picture on how consumers are expecting to budget their way through the coming months.
Will consumers continue spending despite inflation?
Consumers will continue spending on day-to-day luxuries like in-home entertainment (such as streaming subscriptions), beauty and personal care items, and celebrating special occasions with friends and family. As much as 63% of consumers said they would continue to spend the same or more on beauty and personal care items and celebrating special occasions, with 62% for in-home entertainment.
Where are consumers cutting costs to accommodate inflation?
Eating out, out of home entertainment such as concerts and cinema tickets, and travel are the three areas where consumers are most likely to cut costs, followed closely by spending on home furnishings and on apparel. In total, 50% of consumers said they would cut down on eating out at restaurants, and this figure was higher for women at 56%. Women overall are more likely to reduce spending across all categories, from groceries to travel.
Also on the chopping block? This year’s Christmas presents: 38% said they would be spending less.
Best practises for brand marketing during inflation
While consumers will no doubt continue to tighten their wallet, the results show that they are still willing to spend on day-to-day luxuries – what iconic British retailer John Lewis is calling the “moment economy”. In their own survey, John Lewis found that more than half of respondents would prefer to spend money on things that made them happy day to day.
While most day-to-day spending might not be impacted, marketers can expect consumers to be more cautious about purchasing bigger ticket items (e.g. travel) and that spending over the Christmas season is likely to be lower than usual. For brands, this means continuing to articulate the value of their brand and products within their campaigns, while adapting their messaging to suit the current climate and respond authentically to its challenges.
