Be Aware of Consumers’ Contradictory Buying Habits
American consumers are a savvy lot, but they can act in a contradictory fashion, especially during these times of economic uncertainty. According to McKinsey & Company’s latest Consumer Pulse Survey (February 24–March 1), they are most concerned with increasing prices and job security but are generally optimistic and are still buying products and services.
Although value has always been a major influence on consumer spending, 80% are buying less of specific merchandise or visiting more retailers in search of the lowest prices. Gen Zers and Millennials are leading this trend at 88% each. Consumers in the middle-income bracket ($50K–$100K) are just slightly more likely to make these shopping changes than those in the lower bracket (<$50K), or 82% and 81%, respectively. Three-quarters of those in the highest income bracket (>$100K) are also focused on more value for their dollars at 76%.
US luxury goods shoppers aren’t immune to the effect of higher prices and inflation. According to Citi, luxury spending by credit card in the US decreased 18% during March 2023, the lowest rate in almost three years.
Despite concerns over inflation, high prices, job security and shopping for the lowest prices, the McKinsey survey revealed another contradiction: Many Americans plan to go on a spending spree during 2023.
Americans’ Plans for a Spending Spree During 2023
| Generation | Low Income (<$50K) |
Middle Income ($50K–$100K) |
High Income (>$100K) |
| Gen Z | 61% | 66% | 66% |
| Millennials | 45% | 51% | 71% |
| Gen X | 30% | 34% | 39% |
| Baby Boomers | 20% | 20% | 25% |
McKinsey & Company, April 2023
McKinsey’s analysis of credit card spending, comparing February 2023 to February 2022, found cosmetics (+8%), out-of-home entertainment (+7%) and fitness (+7%) were the top three categories. The bottom three were home goods (-6%), pet supplies (+1%) and retail apparel (+2%).
As local advertisers/retailers struggle to interpret the economy and consumption, the McKinsey findings are exactly the kind of data and insights you can share to guide them through this period of uncertainty.
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