Talk of ‘inflation’ can backfire on brands, says Collage Group
Receive instant alerts when news is published about your stocks. Claim your one week free trial for StreetInsider Premium here.
Washington, DC, Aug. 17, 2022 (GLOBE NEWSWIRE) —
A full 93% of respondents said they noticed items they usually buy are now more expensive, and 78% said they were “somewhat” to “very worried” about their current financial situation.
These findings are in line with new research from cultural intelligence firm Collage Group, which also found that brands should avoid certain talk about the economic outlook when talking to consumers.
Data from the analysis, “Guard Against Recession with Cultural Insights”, warns brands to refrain from using terms such as “the economy”, “recession” and “inflation”, because these expressions can trigger negative reactions from consumers.
“These words polarize shoppers, and once they hear them, they tend to see the message as loaded or overly political,” said David Evans, product manager at Collage Group. “I recommend brands avoid playing into economic anxiety.”
Evans asks brands to connect around personal finance issues and seek to address day-to-day issues like paying off debt and managing rising costs.
93% of consumers want brands to do Something to help them, the main actions being to offer discounts, reduce prices and provide lower cost versions or packaging.
According to the study, it’s critical for brands to recognize that consumers navigate the waters differently, especially between racial and ethnic segments.
Collage Group found that 35% of Hispanic Americans say they are “very worried” now, far more than other groups. As a result, they have already started adjusting their purchases in virtually every category.
Black Americans, however, are much less worried about what’s to come and, in fact, are maintaining their buying behaviors. Evans attributes this balance to the tenacity of Black Americans over time, citing the segment’s higher levels of optimism and courage, two of the diverse cultural traits that Collage Group tracks across all demographics.
Asian Americans say they are not worried yet. However, Asians also say they plan to adjust their spending in the future in order to be safe.
“Americans of all racial and ethnic backgrounds are feeling the pinch, and brands need to respond with empathy and show they are ready to act,” said Jack Mackinnon, senior director of Collage Group and author of the study.
The results were also notable in terms of generational perspectives. Millennial consumers (aged 26-42) and Gen X (aged 43-57) were the most likely to be very worried about their current financial situation, at 34%.
“In the case of the young to middle-aged generations, their high level of concern is likely related to the life stages they occupy,” Evans said. “These are the segments that often have kids, mortgages and college debt, so inflation and high prices would naturally cause anxiety.”
Fifty-two percent of Americans are bracing for a deterioration in the US economy over the next six months, according to the study. This point was overwhelmingly raised by White Americans at 58% and Asian Americans at 52%.
The reality is that because of their fears of inflation, Americans are actually cutting back on spending. This includes an increase in the purchase of more generic brands or stores. Across cultural lines, Hispanic Americans took the biggest steps to save, as 74% of respondents said they started buying more from generic brands or stores because of high prices. Hispanic and white Americans were slightly more likely to report taking such action at 77% and 75%, respectively.
Americans’ places of purchase are also changing, with Hispanic and white respondents reporting that they have recently decided to shop more at discount stores in order to save money. Hispanics were 77% more likely to report this behavior.
In addition to this, the nation has taken other measures to cut spending. Fifty-six percent of respondents said they dine out less. Driving was also affected. In the wake of rising gas prices, 55% said they were driving less. Even in areas where fuel costs appear to have fallen, the totals are still much higher than this time a year ago.
A number of shoppers delayed some of their biggest purchases, with 32% saying they put off bigger purchases. Twenty-five percent said they had canceled travel plans and 24% said they had canceled streaming, audio and video platforms.
Black respondents were less likely to report cutting back on eating out (46%) or driving less (41%) to save money. Hispanic and Asian respondents were more likely to report having abandoned travel plans at 31% and 30%, respectively.
In general, Americans are willing to switch to cheaper options if their financial situation deteriorates, but this motivation varies by race and ethnicity. Respondents said they were more willing to switch to cheaper grocery (46%) and home care (37%) options if the economy continues to decline.
So what steps should brands take to authentically address the economic concerns of American consumers?
“It’s critical that brands avoid attempting to take a ‘one size fits all’ approach to the multicultural segment,” said Jack Mackinnon, Senior Director of Collage Group and author of the study. “Brands also need to recognize the variety of consumer reactions to inflation.”
Collage Group recommends 5 action steps brands should consider.
ABOUT THE COLLAGE GROUP
Collage Group is the leading source of diverse consumer cultural information for more than 250 iconic American brands across 15 industries. For over 10 years, Collage Group has developed consumer insights across race and ethnicity, generation, gender identity, gender, and parent-child relationships with a focus on segments of growing consumption. Members of Collage Group’s cultural intelligence programs – Multicultural, Generations, LGBTQ+ & Gender, and Parents & Children – have access to over 10 years of consumer insights and over 300 studies with new data unveiled every week . Find out why iconic American brands turn to Collage Group for diverse consumer insights and best practices.
Quintin Simmons Collage Group [email protected]
Source: Collage Group