Consumer behavior has shifted in recent months, as the rise in inflation and economic uncertainty has changed consumer spending habits.
Previous reports from WWD in 2020 indicated that malls were on their way to near extinction due to the impact of the COVID-19 pandemic and the massive growth of online shopping. However, a study by Placer.ai surprisingly found that mall traffic increased month-over-month in March 2023.
Indoor mall visits increased by more than 15 percent, open-air lifestyle center visits increased by 15 percent and outlet mall visits increased by 23 percent. More than 62 percent of visits in 2022 were to outlet malls, which have the most foot traffic on the weekends, as compared to about 38 percent during the weekday. This is most likely because the format requires more space for stores and thus is further away from consumers.
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Furthermore, a study by NewStore found that 39 percent of consumers have confirmed that they are shopping more at brick-and-mortar retailers than last year. However, 77 percent of shoppers have stated that finding discounts, promotions and sales are more important when shopping in person.
In addition, NewStore found that expectations for sales associates have risen. More than 60 percent of consumers expect a store’s sales associate to help them find a deal or know about promotions and discounts when shopping in-person. The ability for checking out anywhere on the store floor has risen to 44 percent versus a previous study by the company in 2021.
Moreover, 43 percent and 45 percent of shoppers say the state of the economy impacts their willingness to spend in-person and online, respectively. This suggests that consumers are more willing to wait to spend their money when promotions and sales occur, and they believe that they are getting the best price possible.
Despite research by NewStore suggesting that consumers are hesitant and waiting to spend, new research from Rakuten looking specifically at Generation Z’s relationship with luxury found that shoppers are continuing to make luxury purchases during this economic downturn.
“The most surprising part of this is that younger buyers, specifically Gen Z and Millennial shoppers, are growing three times faster than other generations as luxury buyers,” said Kristen Gall, retail and shopping expert at Rakuten. “Gen Z consumers can spend more on luxury goods because they have more disposable income. Younger consumers are prioritizing these purchases because they see them as investment pieces, something to last for years, and potentially generations to come.”
With this in mind, Gall said luxury retailers should continue catering their marketing efforts toward Gen Z by meeting them where they consume news and are influenced to shop. “In the case of Gen Z shoppers, this means cultivating a community on Instagram and TikTok, in a way that’s authentic to the brand, its target audience and each respective platform’s strengths. Our data has shown that Gen Z and Millennial shoppers are increasing their monthly fashion budgets by more than 26 percent in order to obtain the higher end pieces and brand names they desire.”