This year’s election process seems to have caused a shift in consumer sentiment, as many are expecting a decline in their financial well-being, regardless of who wins the November election.
The results of the recent IRI Consumer Connect survey have revealed that many U.S. consumers expect their financial situations to deteriorate in 2017.
According to the survey results, nearly two-thirds of U.S. consumers believe that, regardless of who wins the coming presidential election, their financial health is poised to deteriorate in 2017. In contrast, consumers have been feeling a bit more optimistic about their personal finances and putting the Great Recession behind them for the past couple of years.
Overall, 64% of consumers believe their households’ financial health will decline if Donald Trump is elected compared to 60% of consumers if Hillary Clinton is elected. In addition, 36% believe their households’ financial health will improve if Trump is elected compared to 40% if Clinton is elected.
“While Americans’ attitudes towards personal finances have improved in recent years, this election process appears to signal a shift in consumer sentiment,” said Susan Viamari, vice president of Thought Leadership for IRI. “However, the changing of the guard at the White House always represents uncertainty, but this year close to 60% of consumers feel that their financial health will deteriorate no matter who is elected president. This will absolutely impact retailers and CPG manufacturers, as they brace for a tightening of the purse strings.”
Feeling the Pinch
For years, IRI has been studying the types of trade-offs that consumers make when they feel their budgets are being squeezed. Some behaviors, such as list-making and shopping at multiple stores, become part of the regular routine, even when finances are looking stable or are improving. The following are shopping behaviors that consumers say they will be adopting:
- 62% of consumers who think their finances will decline say they will make written shopping lists, compared to 59% who think their finances will improve.
- 75% of consumers who think their finances will decline say they will buy needed items when they are on sale to save money, compared to 54% who think their finances will improve.
- 62% of consumers who think their finances will decline say they will purchase private label products to save money, compared to 41% who think their finances will improve.
- 48% of consumers who think their finances will decline say they will try new, lower-priced brands to save money, compared to 36% who think their finances will improve.
- 38% of consumers who think their finances will decline will visit multiple retailers to keep the grocery bills down, compared to 35% who think their finances will improve.
Splurging on Indulgences
Consumers still want to treat themselves and will continue to splurge on indulgences. Those with a sunnier outlook on their finances are looking for stores that offer the following selection of luxuries:
- 56% of consumers want gourmet food and beverages
- 55% of consumers desire local/artisan food and beverages
- 51% of consumers require prepared/easy-prep meal solutions
- 51% of consumers fancy natural/organic food and beverages
- 48% of consumers wish for technology that would make shopping the store more exciting
- 39% of consumers would like the ability to purchase online and pick up in store
Focusing on the Young
During the Great Recession, younger consumers had the most pessimistic outlook. However, the tide is definitely turning as the latest IRI survey results found that younger consumers are now more optimistic than older consumers about their personal finances in the next six months prior to the inauguration of a new president. A full 78 percent of consumers aged 18-34 and 69 percent aged 35-54 believe their households’ financial health will improve in the next six months, compared to 60 percent aged 55 and up.
- 38% of 18- to 34-year-olds and 31% of 35- to 54-year-olds are willing to pay more for food/beverages that are natural and organic compared to 21% of those aged 55 and up.
- 58% of 18- to 34-year-olds and 52% of 35- to 54-year-olds are willing to pay more for OTC medications that treat multiple symptoms compared to 43% of those aged 55 and up.
Still, these younger consumers are willing to make trade-offs to save money. After all, they have come up in a very conservative place in time and frugality is becoming programmed into their CPG shopping journey.
- 53% of 18- to 34-year-olds and 51% of 35- to 54-year-olds buy beauty products that are not their regular brands because they’re on sale compared to 40% of those aged of 55 and up.
- 59% of 18- to 34-year-olds and 48% of 35- to 54-year-olds buy food/beverage brands that are not their preferred brands because they have a coupon compared to 41% of those aged 55 and up.
- 54% of 18- to 34-year-olds and 46% of 35- to 54-year-olds buy OTC medications that are not their preferred brands because they have a coupon compared to 36% of those aged 55 and up.
”When it comes to decoding the consumer mindset, there is perhaps nothing more complicated than predicting how a significant transition, such as electing a new president, will impact the way consumers feel and behave,” concluded Viamari. “CPG manufacturers and retailers must be more vigilant than ever as the torch is passed, and ready to respond in real time to shifting attitudes that ripple through the marketplace.”