In a report that asked “what matters to today’s consumer,” researchers from Capgemini found that in 2023 consumers were, unsurprisingly, overwhelmed with concern about the cost-of-living crisis. The concern carried through to expectations for how consumers shop and ultimately impacted purchasing behaviors throughout the year as they worried about making ends meet.
However, while financial concern persists, Capgemini’s consumer survey found that it is getting better, fractionally. Overall, 52 percent of consumers said they were “extremely concerned” about personal finances in 2023, compared to 61 percent who said the same in 2022. In the U.S. 33 percent of consumers said they plan to reduce discretionary spending, compared to 39 percent in 2022.
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Still, the authors of the report said “consumers continue to be stringent about their purchases,” pointing to the 63 percent of consumers who report they are buying private-label or low-cost brands over named brands this year with as many as 70 percent of consumers also saying they are making fewer impulse purchases and 66 percent cutting back on non-essential items. Forty percent of consumers will continue to plan to cut spending across multiple categories including luxury items (54 percent), furniture (53 percent), health care products (33 percent) and groceries (25 percent).
However, cost of living is not the only thing creating an impact on consumer behavior. As generative AI has risen over the past year, Capgemini’s report found that one in five consumers has already used generative AI to shop.
With this in mind, Lindsey Mazza, global retail lead at Capgemini Group, said that “even more relevant for retailer action is that over half (52 percent) of those consumers who use generative AI have converted from product discovery to purchase, replacing traditional search tools when looking for product recommendations. These productively disruptive tools have been the motivation for the rise in impact of micro-influencers, like those promoting today’s most rapidly shifting trends. Becoming a part of the trend means understanding micro-segmentation and using influencers within segments to share conversations with their followers. Whether it’s women selling to women, teens selling to teens or beyond, it’s clear that diverse and inclusive influencer programs will define retailers’ success in social channels, and help retailers get ahead of upcoming trends.”
To that end, the company’s report found that social commerce continues to grow driven primarily by Gen Z. In the U.S. specifically, 30 percent of consumers said they have purchased something on a social media platform, which increases to 48 percent looking at Gen Z consumers. Gen Z’s preferred platforms for purchasing items were ranked as Instagram (70 percent), TikTok (63 percent) and YouTube (58 percent).
The categories with the most purchases made on social media were revealed as apparel (62 percent), health and wellness (61 percent) and personal products (58 percent) — within each category, consumers said they had purchased at least three times in the past year alone. More than other generations, Gen Z said they “have occasionally purchased apparel and accessories via social media” at 51 percent, compared to 23 percent of Millennials.
Digging deeper into why consumers are finding preference for shopping on social media platforms, Capgemini found that 46 percent of Gen Z consumers and 44 percent of Millennials are discovering the products via social media. Additionally, 56 percent of consumers who have bought on social media say they have “accessed reliable reviews through their social media feeds” with many consumers saying that they feel social media “helps to accelerate purchase decisions.” Fifty-three percent of all consumers who have shopped on a social media platform admit they have purchased after being influenced by feeds, stories, reels, live shows and influencers.
As consumers continue to show interest in using technology to interact with stores and brands and a willingness to explore new technology, Capgemini advises retailers to evolve with technology preferences, paying attention to today’s ever-conscious consumer.
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