Greg Petro, chief executive officer of First Insight Inc., told WWD that data is pointing to “spending restraint” in the future — and it follows a pattern he’s not seen since right before the Great Recession.
Petro said during that time, women shoppers were in tune with changes in market conditions, and had suggested concerns regarding future spending right before the bubble burst. Now, amid disruptions across the entire supply chain, he’s seeing the same trends again.
“What’s concerning to me is when you look at the stats and numbers of COVID-19 breakouts across the United States and the death mortality rate as well as the number of vaccinated people along with those that have gotten COVID-19, it’s all generally pointing in the right direction [compared to early pandemic numbers]. So why is she so concerned? Why are consumers concerned about shopping and going out and doing things?” Petro said.
Petro believes female shoppers are better connected to their social networks. And when they show constraint, it’s best to listen, he said.
Although retail sales jumped 0.7 percent from July to August, consumer confidence is trending down. In August, the Conference Board said the Consumer Confidence Index fell to its lowest level since February. The board also said the Present Situation Index, which is based on consumers’ assessment of current business and labor market conditions, dropped to 147.3 in August from 157.2 in July while the Expectations Index (based on consumers’ short-term outlook for income, business, and labor market conditions) declined to 91.4 from 103.8.
Lynn Franco, senior director of economic indicators at The Conference Board, said that concerns about the Delta variant, “and, to a lesser degree, rising gas and food prices, resulted in a less favorable view of current economic conditions and short-term growth prospects. Spending intentions for homes, autos and major appliances all cooled somewhat; however, the percentage of consumers intending to take a vacation in the next six months continued to climb.”
Interestingly, research that was conducted on Aug. 5 and then released on Aug. 10 from First Insight predicted the drop in the consumer confidence numbers from the Conference Board. First Insight data showed that the Delta variant is negatively affecting consumer sentiment. There was a 25 percent increase in the number of consumers reporting to First Insight that they are “very or somewhat worried” about COVID-19, which marked the highest one-month jump since March 2020. Petro said based on current consumer sentiment and on past patterns, retailers and brands need to be prepared for a pullback.
Regarding differences in sentiment between women and men, the First Insight data showed that women are “significantly less likely to be vaccinated than men, with fully one-third of women [respondents] stating that they don’t intend to be vaccinated versus only 18 percent of men,” the company noted while 82 percent of male respondents “have already received the COVID-19 vaccine or plan to versus 67 percent of female respondents.”
The survey also revealed that 77 percent of female consumers “confirm that the coronavirus has impacted their purchase decisions compared to pre-pandemic compared to 70 percent of males,” First Insight said, also adding that 73 percent of women “feel unsafe testing beauty products/makeup versus 70 percent of men.” In stores, 61 percent of women retail workers polled said they feel unsafe working with a sales associate, which compares to 52 percent of men.
To give the current situation additional context, Petro also shared his perspective on what’s occurring in the economy. He said in response to the pandemic, the stimulus program pumped a lot of money into the market. While it was needed, it created an artificial boost to the economy that, when coupled with the pandemic itself, has resulted in forcing supply-and-demand curves to wobble. Petro said “demand variability” and inflationary price trends are also putting pressure on the market.
Petro said the declining confidence may be due to shoppers anticipating a time coming when they’re going to have to pay the piper for the stimulus programs in the form of higher taxes. In the meantime, Petro urges brands and retailers to actively listen to shoppers, and adjust their merchandising and pricing strategies accordingly.