Confidence Holds Up, But How Much Can Consumers Take? – WWD

OLDThe customer was feeling a little better Entering Christmas – but the trick is to keep the good vibes going until 2022 with Omicron and inflation lurking.

Board of Directors closely monitor Consumer Confidence Index rose to 115.8 this month, up from November’s 111.9, revised upwards.

The index measures shoppers’ temperatures through December 16, capturing early reports and an increase in the Omicron variant, but not the dramatic swings in COVID-19 cases in the United States just before the holiday season.

Lynn Franco, senior director of economic indicators at The Conference Board, said she’s optimistic heading into 2022, but be cautious about how consumers will react.

Franco talks about the predicted wave of Omicron infections. “On top of that, you also get this inflation. Both of these components can impact the overall economy. We expect some mildness in the first quarter.”

But that softness, or just a natural slowdown after holiday sales, could feel like a huge setback for retailers that have performed surprisingly well this year. , increasing sales despite the pandemic and its sub-supply chain having a setback.

In addition to any Omicron caution, consumers are also operating without the government stimulus that spurred spending earlier this year. And after nearly two years of the pandemic, all pent-up needs can be spent.

Franco said consumer spending will “turn to a sustainable rate,” shifting to 2.5% growth in the first quarter from the explosive 6.5% growth forecast for this quarter.

While the first waves of COVID-19 lockdowns were jarring from every angle, Franco said consumers have learned to take on new waves of cases, for example, adjusting their behavior to increase cases that come with the Delta variant. And she expects the same to be true of Omicron.

“The economy has opened up,” she said. “Restrictions have eased and consumers have been relatively well off. But we do see a drop in periods where some sort of variation is held, and we see spending taking a hit as a result of direct services. ”

Consultant Katie Thomas, head of Kearney’s Global Consumer Institute, says it’s becoming increasingly difficult to predict consumer behavior – in part because it’s increasingly difficult to know where anything stands.

“We have lived in this uncertainty for too long,” says Thomas. “I still don’t know what life will be like three months from now. One step forward, two steps back. Consumers are still spending more or less on what they know they will use or what they will need.

“We can’t predict what will happen with the rules of the virus, they seem to change every day,” she said.

While consumers have proven resilient this year, they have also changed and in lasting ways that are still working.

Marketing expert Martin Lindstrom says many shoppers are suffering from a “lack of change” in their lives, such as a major shift in context with a holiday or a daily shift between homes. and workplace.

More variation leads to the perception that time is moving more slowly. Instead, people working from home are living “very monotonous” lives, where “one day merges into another,” he said.

Lindstrom, the most recent author of “Common Sense: How to Eliminate Red Tape, Bad Excuses, and Corporate BS,” said which works at the intersection of biology and consumer habits. people are exhausted and need to reset.

But for now, it looks like Omicron will reinforce the changes consumers have made during the pandemic period so far with shoppers focusing on “tactile” purchases to compensate for the isolation. their establishment, while at the same time seeking purpose.

It’s a series of changes that cause consumers to turn to the poles, buy more private labels, and spend as little as possible on everyday items while saving on that larger ticket “gives you experience or a memory or is a long-term investment,” says Lindstrom.

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https://wwd.com/business-news/business-features/consumer-confidence-retail-shoppers-covid-omicron-holiday-1235022878/ Confidence Holds Up, But How Much Can Consumers Take? – WWD

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