Consumer closets are shrinking.
Despite global consumer confidence trending upward, spending on clothing and accessories is playing second fiddle to savings and experiences. Nielsen’s second-quarter Consumer Confidence Index found that economy concerns are driving a more conservative approach to superfluous shopping.
The index tracks the perceptions of local job prospects, personal finances and immediate spending intentions. Confidence levels are gauged around a baseline of 100 degrees to discern correlating optimism. Within a country, seven points tends to indicate a significant change. More than 30,000 individuals from 63 countries are included in the survey.
Since the end of 2016, morale is up regarding job prospects, the research found. “More global consumers believe their job prospects are stronger now than they were in fourth-quarter 2016. Optimism levels about personal finances increased from a score of 47 at the end of 2016 to 50 among consumers who said their finances were good,” the report said.
The relative optimism of personal job security has contributed to tension with rising concerns about the economy. “Recession concerns are highest in Latin America and Africa/Middle East,” said the report. The result — individuals aren’t spending as liberally as they might should the economy’s stability be more resolute.
“Savings, holidays/vacations, and new clothes are the top three ways respondents around the world plan to make use of any additional cash, and this was also consistent across most regions,” the report said. “In addition, the percentage of those planning to put money towards these areas has increased since the end of last year. Paying off debt/credit cards/loans has also increased globally and cracked the top three for those surveyed in Africa/Middle East, Latin America and North America.”
What’s more, consumers are lowering spending on recurring, daily purchases in order to save money — 65 percent of respondents said they’ve changed their spending to save on household items. “Although respondents globally said they plan to use some of their spare cash to purchase new clothes, spending less on new clothes was the number-one action respondents have taken to save money,” the report said. “Globally, consumers have also cut down on out-of-home entertainment and tried to save on gas and electricity to reduce household expenses.”
Interestingly, following economic apprehension, health, job security, work/life balance and terrorism rounded out the top five concerns of global consumers for the coming six months.
These global concerns are driving consumers to scrutinize even the most minute purchases, resulting in the possible constriction — and downturn — of the economy, thus realizing their apprehensions. Retailers and brands might consider approaching these overarching sentiments by growing loyalty programs that reward frequent patronage and provide exclusive sales and deals in order to align with current consumer frugality.
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