As startup conditions become more favorable for entrepreneurs, the eCommerce sector is experiencing unprecedented growth. This is why marketers must understand the driving factors behind consumer spending habits. This information can help them adjust their business objectives according to consumer preferences.
As the year progresses, consumers are becoming more aware about the social impact of their choices. For many social activists, consumer behavior holds a lot of power when it comes to driving social change. This power can be reflected in the efforts to boycott the goods and services of Israeli brands.
Keep reading to find out more about consumer behavior trends in 2023.
Table of contents
What Are Consumer Spending Habits?
Consumer Spending Habits refers to the behavior exhibited by consumers in relation to purchasing products/services. This behavior is influenced by a combination of internal and external factors.
These habits can be detrimental to sales success. This is why it is important for marketers and business owners to stay on a lookout for shifts in consumer spending patterns.
It is essential to use the relevant KPIs to determine consumer spending habits so that the right changes can be made, to meet consumer demand.
Factors Affecting Consumer Behavior
There are various factors that influence consumer behavior. However, economic factors have the most influence on spending habits. It is crucial for marketers to make use of financial KPIs to measure and assess the effect of consumer behavior on sales.
Here are some of the most important factors that influence consumer behavior.
Economic Factors
There is a whole list of economic factors that exert influence on consumer behavior. For example, employment/occupation plays a pivotal role in driving spending habits. The consequences of mass-layoffs can be far-reaching and can impact spending habits.
Another economic factor is that of inflation. This steers consumer behavior like nothing else. In recent times, people have found clever ways to keep on with their spending habits despite inflationary periods.
For example, the use of cashback apps and price comparison software have become increasingly popular. These digital solutions provide relief to consumers in times of economic uncertainty.
Socio-Political Factors
There are social and political factors at play when it comes to consumer behavior. In the past, and the present, consumers have boycotted apartheid-state brands. In South Africa, this helped end the injustice in the state.
Many consumers now base their spending habits on social responsibility. Consumer resistance can be powerful in bringing about political change. Many brands choose to stay apolitical to prevent the risk of backlash.
There is a mounting sense of awareness among modern consumers. The political stance of a brand can be consequential in terms of sales success.
Psychological Factors
These set of factors play a pivotal part in directing consumer behavior. Some examples of these factors include; motivation, perception, learning, attitude and belief.
Marketers make use of psychological elements in their campaigns to motivate consumers to buy their products/services. For example, a visually-striking advertisement can be a persuasive way of communicating with consumers.
There are different ways brands can use consumer psychology to increase user engagement and sales. This can prove to be a powerful way of driving consumer habits.
How to Determine Consumer Spending Habits?
To determine consumer spending habits, it is important for business owners and marketers to use the right KPIs and survey tools. This insight can help marketers make informed decisions.
Metrics also help marketers improve their marketing strategy to meet customer expectations.
Surveys can inform business owners of consumer demands so that they can make the right decisions for their business.
Metrics
For eCommerce stores, metrics like web traffic help business owners assess the popularity of their products/services. This informs them of the relevance of their goods and services. In addition to this, the Repeat Customer Rate (RCR) indicates how well a business is performing in terms of sales.
The use of relevant metrics can help business owners mend their marketing campaigns.
Surveys
To gather feedback from consumers, customized surveys work great. By incentivizing online web visitors with a discount, you can gather useful insight. Some sample questions include:
- What do you seek in a brand?
- How do you pick and choose a product/service?
- When purchasing a product/service, do you keep any ethical considerations?
There is an endless list of tools available that can help you collect feedback. SurveyMonkey is a great option. It presents users with a broad range of templates and even customization options.
Consumer Spending Habits in 2023
In 2023, consumer spending habits seem to be taking a turn. There is a looming demand for sustainable products/services. Many consumers are now also interested in the sourcing practices of a business.
Down below are some of the most trending consumer spending habits of 2023 yet.
Shift Toward Sustainable Brands
The alarm bells raised by climate activists have alerted some businesses to shift to sustainable practices. For example, Unilever has made efforts to combat climate change by reducing their brand’s environmental footprint.
By sourcing sustainable materials, this brand plans on keeping up with the modern consumer. This ethical consideration comes as a response to the demand from consumers. There is a high level of awareness among consumers regarding the environment.
This trend is expected to steal the show in the months and years to follow.
Increased Reliance on Online Shopping
Many users are now becoming increasingly comfortable with online shopping. The convenience of online stores has radically changed consumer spending habits. For instance, it has become far more convenient to indulge in retail therapy.
With the swipe of a credit card, online shoppers can make multiple purchases at once. The ease of shopping has certainly facilitated sales for businesses. In 2023, consumer spending habits will focus on online shopping.
This shift in consumer spending habits is clear to see with the advent of platforms like Metaverse.
More Spending on Travel
As travel has resumed again, the tourism industry seems to be thriving. This comes as no surprise as the COVID-19 pandemic left most people with a heightened desire for travel. In 2023, increased spending on travel is expected.
According to survey findings, 72% of the Gen Z interviewed planned on splurging on travel/vacation in 2022. This year seems to be reassuring for the tourism industry. There is an ever-growing number of people wanting to travel.
The catastrophic impact of the COVID-19 pandemic on the travel industry was significant. In 2023, consumer spending habits will serve as atonement for the industry.
Influencer Recommendations
For consumers, influencer recommendations play a decisive role in purchasing decisions. This is because consumers rely on their recommendations.
Influencers build powerful identities on social media platforms. As a result, many consumers subscribe to their ideas/recommendations. The power of influencers in driving consumer behavior is the reason why so many brands partner with them.
As the year progresses, influencers are taking online platforms by storm. These social media users will continue to instruct spending habits in the near future. The effectiveness of influencer marketing is clear to see in sales and marketing.
Luxury Spending
This one may come as a shocker. But, luxury spending is becoming more and more of a trend. There’s a growing number of people opting for luxury goods and services. Gen Z, in particular, seems to be contributing to this trend.
It is reported that Gen Z and Gen Alpha are expected to account for a third of the luxury market. This startling statistic comes as a surprise considering the economic conditions. However, more consumers are investing in luxury items.
In 2023, luxury spending is forecasted to increase among the younger generation.
How Can Businesses Cope?
To cope with ever-changing consumer spending habits, businesses should have an effective performance monitoring system in place. This can inform them of any concerning changes in consumer spending habits. By identifying the changes in behavior early on, the right solutions can be found.
For modern consumers, there are ethical considerations when it comes to purchasing from a brand. Therefore, brands should focus on rebranding as it can help them meet consumer demand. Many consumers are subtly renouncing brands that do not go along with their values.
Featured Image: Shopify
