Trends in Consumer Spending and Splurging

• Consumers are becoming more strategic with their spending, splurging during sales-heavy seasons and for specific incentives.
• Brands can compete against well-known names through strategic partnerships, offering discount codes and increasing awareness.
• Shopping behaviors show a shift towards intentional buying, with increased conversion rates despite fewer clicks and transactions.
• Inflation drives up average order values, but consumers are saving on essentials to afford selective splurges and high-end purchases.

Based on the most recent consumer study by impact.com , people who spend more are more thoughtful than they ever have before, but they’re also willing to splash out in order to receive the perfect incentives. 

These are the five most important insights which can allow you to reach your customers more effectively and gain the top spot on their lists of wants by 2024.

Insightful Consumer Shopping Trends

The year 2023 was the first time American customers discovered the brands must be more strategically oriented to make budget-conscious choices. Customers are changing their buying behavior, with discretionary purchases reserved during sales season. However, these changes present unanticipated potential for retail stores. With four out of five Americans having embraced more affordable brand names and higher deals, they’ve an increased amount of cash and are prepared to spend greater than they did in previous years. But, companies must convince consumers that their products are worth investing in.

With the current economic environment partnership agreements give less well-known companies the opportunity to be competitive with household brands through increasing their visibility through trustworthy partners while reducing risks by providing discount coupons. To take advantage of this new trend, brands need to be aware of the changing consumer behavior and determine the most efficient strategies to take advantage of these trends.

2023 Consumer Trend Benchmark research study conducted by impact.com analyzes the consumer’s spending patterns across 2023 and 2022. This research provides brands with the necessary data to appeal to today’s money-conscious consumers by implementing a solid partnership strategy this year.

Methodology

The impact.com Data Science team carried out the study in the month of January to study the most prominent trends in consumer shopping for 2023. The study compared the performance of partnerships, including Average Order Value (AOV) and clicks sales, conversion rates, advertising spend and spending by consumers. The researchers tracked these KPIs by comparison of same-store and year-over-year (YoY) results from brands who actively utilized the impact.com platform between 2022 as well as 2023.

5 Key Insights on the behavior of consumers in 2024’s consumer spending

1. When Prices Increase, Shop habits shift

It was common for people to continue the trend of shopping less by purchasing 7% less by 2023. Since shoppers are preparing to invest more in essentials like gas and groceries and other necessities, they cut down on discretionary spending. The uncertainty has led to decreases in transactions through the majority of 2023 in comparison to 2022 which was only noticeable in December, with an increase of 6% in sales YoY.

People who spent their money waited for discounts during major holiday seasons like Mother’s Day, Memorial Day or Cyber Week. The availability of multiple payment options could encourage more spending discretionary since inflation is expected to stay at a steady pace in 2024.

2. Window Shopping is Out But Intentional Shopping is in

Window shopping and consumer research was different in the past year. Brands experienced an increase of 32% in conversion rates even though they saw a decrease of 29% in clicks by 2023. Sale events that are popular around Mother’s Day, Father’s Day as well as Easter saw less clicks than in the previous year.

The data shows that consumer purchasing intentions were higher in 2023. In general, consumers made less purchases in 2023 and spent less time looking or making impulse purchases. Instead, they concentrated on securing deals for products that were already on their lists. The partnerships may have helped them organize their lists prior to when sales started, thereby saving the effort and time of going to the store.

3. Inflation drives up Cart Values

Although shoppers who are budget conscious trimmed their purchases, the average purchase value (AOV) was still increasing. A mere 2% annual growth in AOV is a sign of the possibility that inflation in prices is making cart prices rise, not as if people were spending more money on items. People who had to purchase additional items might have trimmed their expenditure by seeking alternative ways to save money.

These changes could explain this is the reason AOV decreased more than it usually is and also experienced some slight decline during Q4’s busy sales season. People were looking for methods to reduce their spending in the purchasing of essentials during the entire time, but also indulged in areas like art and entertainment.

4. Strategic Splurging Provides Consumers with the opportunity to enjoy luxury

Prices haven’t stopped 40% of people from deciding to make certain purchases, like expensive food items, or even trips. Although overall spending on consumer goods fell 5 percent YoY, a few segments saw a sudden increase in expenditure.

The slowdown in consumer spending over the third quarter suggested that shoppers may have been preparing themselves to take advantage of the huge discounts they’ve grown accustomed to in holiday events, retail and sales. Companies may consider offering massive discounts throughout the year instead of focusing on special events like shopping and holidays.

5. A slight increase in Advertiser spending Add to

Although the patterns of advertising spending were generally consistent, companies moderately increased the commission rate of their partners during 2023. This extra expenditure was rewarded with increased conversion rates in certain products.

When advertising expenses rise companies may look to boost ROI using the use of performance-based marketing, for example partnership. Due to the changing behavior of buyers, partnership can be an effective way to boost the visibility of brands, increase the likelihood of buying, and encourage even the most cautious buyers to purchase.

Are You Ready to Begin Your Partnership Program?

Meet with our expert team on partnership and ask for a demonstration to ensure that you are on the people’s wish lists through collaborations. The shopping habits of last year’s shoppers reveal that the savvy consumer of today is willing to spend more in a way that brands don’t expect. Partnerships based on performance allow companies to connect with new clients, get more clicks, boost sales, and make money based on the outcomes.

2024 is the Year of Opportunity for Retail Partnerships

An urge to save money on everyday necessities drives people towards new brands, providing the chance to meet potential customers. Partnerships aren’t just “nice-to-have” anymore. They’re the most effective way for companies to generate profits in the current tumultuous economic environment. Find out how partnerships can help to maximize your ROI now.