We’ve spent the last few months discussing the various market and industry responses to the pandemic since COVID-19 started disrupting markets in the first quarter of 2020, and how businesses are recovering in the wake of COVID-19 in the last year and into 2022. What we couldn’t anticipate throughout all of this was just how much inflation would skyrocket and rock the U.S. economy in such a short period of time.
The uncertainty has largely been driven by a combination of increased demand, unstable supply lines and product scarcity, and the resulting hike in commodity prices. Exacerbated by the Great Resignation and fluctuating unemployment rates in the labor market, we’ve seen consumer spending shift all over the spectrum, which led to economic conditions that economists and Federal Reserve analysts being extremely uncertain as to whether to intervene or allow market conditions to run their course.
With Federal Reserve leadership recently raising interest rates a number of times in order to cool inflation, UpCity has now started to explore how small businesses and consumers would face the possibility of another financial crisis so close on the heels of having survived a recession during the pandemic. Elsewhere this month, we’ve explored at length a survey of small businesses and the methods they are planning to deploy in response to the impending recession.
However, we felt that that was only telling half of the story, and in order for our community of small businesses to truly have the insight they needed to navigate the anticipated financial crisis, we had to explore consumer opinions and behaviors in response to the recent fed tightening of the reigns via interest rate hikes that in turn caused massive stock market fluctuations.
Working with Pollfish, UpCity has surveyed 600 U.S. consumers about how they plan to change their own spending habits if a recession were to strike in the next few months. We explored evolving spending habits according to consumer age, income, employment, and gender demographics, and organized our metrics according to three major discussions:
- Consumer Recession Concerns
- Consumer Spending Adjustments
- Consumer Brand Loyalty
To give further weight and insight into the discussion, we canvassed the larger consumer community across several online channels and gathered their guidance and input into the article according to how they felt about a pending recession, how they planned to change spending habits, and whether a recession would impact their brand loyalty. Through the combination of Pollfish and the insight of consumers across industries, we hope that our community of B2B and B2C service providers and small businesses who follow us will gather the necessary knowledge they need to properly position their own companies relative to the impending recession.
Consumer Recession Concerns
84% of overall consumers are either somewhat worried or extremely worried about the possibility of an upcoming recession in 2022
News outlets have not been subtle in the last few months regarding how they feel about the market’s near future–especially due to the rampant inflation brought on from the economic recovery from COVID-19 in 2022. Regardless of which political or social entity is being blamed for current conditions, most experts agree that conditions are ripe for market volatility, so it’s very little wonder that such a high number of consumer respondents to this survey were at the very least somewhat worried about a recession.
15% – I’m not very worried about a recession
42% – I’m somewhat worried about a recession
42% – I’m extremely worried about a recession
However, consumers ages 35-44 are the most worried about a recession at 50%
Much of the worry over the recession can be broken down demographically according to age, with older Millennials feeling the most panic in regards to an impending recession. Given the large percentage of the middle class made up by this demographic and how hard-hit the middle class has been in recent months, it follows that they would be concerned about worsening conditions. Social structures have shifted so that younger respondents are largely still living with parents or roommates, so it makes sense that they might feel insulated. Not to mention, long-term savings and retirement funds could be the mitigation and protection against the recession being relied upon by older respondents, but the recession during the pandemic showed us that few demographics are truly safe in the event of a massive disruption across markets and industries, so no matter what age you are, our data shows you should be at least considering ways to insulate yourself in the coming months against financial uncertainty.
| Majority breakdown by age | |
|---|---|
| 18-24 years old | 46% – I’m somewhat worried about a recession |
| 25-34 years old | 41% – I’m somewhat worried about a recession |
| 35-44 years old | 50% – I’m extremely worried about a recession |
| 45-54 years old | 48% – I’m extremely worried about a recession |
| 55+ years old | 51% – I’m somewhat worried about a recession |
Concerns over the possibility of a recession are growing across industries and business owners are increasingly sharing their own concerns over the coming economic instability.
“I am concerned about the possibility of an upcoming recession. While the economy has been strong in recent years, there are several warning signs that a recession may be on the horizon. For example, many experts believe that the ongoing trade war between the US and China could lead to a sharp decline in global growth economically. Additionally, rising interest rates and inflation could also put pressure on the economy. As a result, I believe it is prudent to prepare for a possible recession.”
—Isla Zyair, Nutritionist & Blogger, Obesity Controller Association
“Yes, I’m definitely concerned about an upcoming recession. I’m retired and I’ve had an interest in finance and business my whole life so I have saved and planned and am in a good spot financially. But, I am still concerned because I’ve seen things happen in the economy in the last few years that I never imagined would happen. And I think there is a lot of geopolitical instability that might lead to actual wars and that will make this recession even worse. So while I have done a good job of saving and planning, I’m concerned about the near future. I’m especially concerned for the many people that are in a less fortunate position than myself. I think we are in for some rocky times ahead.”
—Dave Anderson, Founder, BMOGAM Viewpoints
“Yes, I am very concerned about the possibility of an upcoming recession. The recession will have a significant impact on the country’s overall economy. It will again drastically affect the prices of all products available. The recession may also show a negative sign on the country’s growth.”
—Melissa Terry, CFA, VEM Tooling
With the growing concern of an impending recession, companies need to reconsider their business model and budget strategy in the months to come. In the next section, we’ll explore how respondents plan to change their spending and what processes will remain important.
Consumer Spending Adjustments
50% of consumers, regardless of household income noted that they’re going to prepare for a recession by switching to using less expensive brands
There are many products that are simply necessities and cannot be foregone even in the face of a recession. That doesn’t mean though, that consumers aren’t willing to compromise on brand if it means they can get the same or similar product or service for less from a competing brand. This has become a challenging and at times even an impossible adjustment to make given supply line disruptions. There have been many cases where respondents were forced to change brands to less expensive brands out of a simple need for the product but their preferred brand isn’t available on the shelf.
50% – I’m going to switch to less expensive brands
37% – I’m going to keep purchasing the current brands I use but less often
12% – I’m not going to change the brands I currently use or adjust the purchase amount/frequency
28% of users plan to further adjust their spending habits by shopping for more sales and discounts. These specific plans varied more when examining consumer responses by employment status
The worst remedy for a recession is for consumers to stop spending altogether. Market activity is vital for combating higher prices and stabilizing costs, providing brands with the necessary capital to stabilize supply lines and production. Therefore, it’s important to understand the strategies consumers plan to leverage to remain active in the economy despite having less spending power due to rampant inflation.
Luckily for most consumers, brands recognize how conscious consumers must be of their budgets, and have started creating value through offering sales and discounts. This tactic might decrease overall sales in terms of dollar amount, but it helps brands to move products off their shelves while giving consumers the perception of saving at the same time, allowing them to purchase other items with their savings and overall increasing market activity.
However, brands that are considered recreational or non-essential have a long road ahead of them. To remain relevant to consumers, they might have to pivot to add products or services that are considered more essential, as well as shift their marketing messaging to position themselves as more essential than other recreational or non-essential brands.
Online shopping became somewhat of a double-edged sword during the pandemic. Online ordering allowed quarantined individuals or people living in areas with strict social distancing requirements to continue to acquire essentials as well as order take-out to maintain a sense of normalcy. However, brands took advantage of this trend to add convenience fees, delivery fees, and other costs to offset their increased business costs, making online shopping a balance between convenience and budget.
Our respondents were mixed in their responses, showing that while some prefer the convenience of not having to travel and saving gas and time, others are willing to continue to shop in person to avoid the fees and uncertain product quality that come with online shopping activities.
28% – I will shop for more sales/discounts
17% – I’m going to reduce my recreational spending
15% – I’ll refrain from making large and/or high-risk purchases
14% – I’ll cancel or pause non-essential subscriptions
12% – I will buy more bulk-sized items
8% – I’ll purchase more items online instead of in-person
7% – I’ll purchase more items in person than online
| Majority breakdown by employment status | |
|---|---|
| Unable to work | 48% – I will shop for more sales/discounts |
| Military | 100% – I’m going to reduce my recreational spending |
| Self-employed | 29% – I will shop for more sales/discounts |
| Out of work and looking for work | 35% – I will shop for more sales/discounts |
| Out of work and not currently looking for work | 30% – I’ll refrain from making large and/or high-risk purchases |
| Employed for wages | 23% – I will shop for more sales/discounts |
| Homemaker | 32% – I will shop for more sales/discounts |
| Retired | 49% – I will shop for more sales/discounts |
| Student | 35% – I will shop for more sales/discounts |
Interestingly, changes in purchasing behavior are largely driven by the individual’s employment status. With unemployment rates and employment arrangements varying by region, the Great Resignation, and the growing reliance on work-from-home or hybrid work arrangements, it’s interesting how many categories of consumers are planning to rely on discounts and sales as their preferred adjustment. Those who are currently seeking work feel less secure in the future of the market and avoid large or high-risk purchases.
Regarding the spending habits of our respondents, our team wanted a better idea of how business owners across industries were preparing for the possibility of a recession in budgeting and spending, so we reached out to the community to gather their insight.
“I’m going to put the financial brakes on a little, but not enough to make a significant difference to my usual level of spending. I’m not a big spender anyway, so I’ll probably tighten my purse strings a little, but I’m also acutely aware that the economy will need the general public to spend to recover from the said recession, and the more we spend the sooner we’ll recover. So, in short, I’m just going to be a little more careful, but I will continue to spend as normal.”
—Adam Enfroy, Founder & CEO, AdamEnfroy.com
“While building your savings in anticipation of a recession can be a good idea, the current inflation rate complicates this math, since letting that money sit is the same as letting it lose value. It’s certainly a good idea to avoid frivolous purchases and take steps to make sure that your job is secure and your resume is in order, but beyond that, ‘wait-and-see’ seems like the best approach for now.”
—Melanie Hanson, Editor in Chief, EDI Refinance
“In preparation for a possible recession, I’m making it a habit to check my daily spending down to the last dollar and make a budget every day. It can be overwhelming to adjust your spending abruptly once a recession hits, so it’s excellent practice to start slow, one day at a time. It helps you change your behavior towards your spending gradually, and by the time you are used to committing to your daily budget, you won’t even notice you are effortlessly sticking to it day in, day out. By extension, you can also save what you haven’t spent in your daily budget to your emergency funds or be a bit more generous for a small self-treat the next day. After all, you don’t have to sacrifice everything to survive a possible recession, including your little leisure and cheat days.”
—Nunzio Ross, Founder & CEO, Majesty Coffee
15% of consumers plan to refrain from making large, high-risk purchases soon
Regardless of employment status, there is much uncertainty in the market right now, that many respondents chose to avoid any large or high-risk purchases. This has been made even worse by a combination of the hike in interest rates put forth by the Federal Reserve and the crash of the crypto market. With these and other disruptions, such as the Ukraine-Russia conflict destabilizing oil prices and food exports, the global economy is having just as unstable an economic outlook as the U.S. economy, leaving many investors on Wall Street and beyond advising consumers and investors to be extremely cautious.
A majority of male respondents plan to cut out vacation spending, while a majority of female respondents will be reducing their spending on home equipment and non-essential repairs
In the case of both male and female respondents, it’s clear that unless a large expenditure is necessary to keep the household secure, intact, and safe, then you can assume that that is an expenditure household are very willing to cut from their family budgets. Men and women alike are looking at expenses and deciding instead to maximize the integrity and value of their homes, while ensuring they can handle daily essentials such as food and rent.
On a scale of 1-8, 1 being the most important / Breakdown by gender
Male Consumers
Vacations
New home and/or land purchases
Expensive backyard items (ex: swimming pool)
Home equipment and non-essential repairs (new refrigerators, washing machines, etc.)
New technology
Vehicle purchases
Luxury fashion/cosmetic items
Other
Female Consumers
Home equipment and non-essential repairs (new refrigerators, washing machines, etc.)
New home and/or land purchases
Vehicle purchases
Vacations
Luxury fashion/cosmetic items
Expensive backyard items (ex: swimming pool)
New technology
Other
It’s not enough to know whether consumers are planning to adjust their spending in advance of the expected recession. Our team decided it was also important to query the community on what purchases they planned to forego altogether.
“To prepare for an upcoming recession in 2022, we have been adjusting our spending habits by finding large projects we can hold off on. For example, we’ve decided to hold off on a landscaping project that we had in mind at our home. At this time, it simply seems like too big of a purchase unless we can find a way to DIY-it.”
—Cheryl Checchio, Social Media Content Manager, Arden’s Garden
“I would classify large purchases as buying a home or taking out a refinancing mortgage. These are some purchases to hold off on when a recession is taking place.”
—Frank Barber, Business Development & Finance Expert, Oxford Gold Group
12% of consumers are prioritizing buying more bulk-sized items in 2022
One strategy many consumers start to leverage more during economic instability is buying in bulk. Buying larger quantities at discount stores like Costco or BJ’s allows consumers to purchase essentials and non-perishable items in discounted larger quantities, allowing them to stretch budgets and plan much further out for their household needs, thus minimizing uncertainties.
Consumers with annual salaries of less than $25,000-$124,999 all plan to stock up on bulk-sized food items in preparation for uncertain times. However, consumers with $125,000-$150,000+ annual salaries will be prioritizing bulk-sized toiletries
The pandemic brought with it several insecurities and uncertainties when it came to shopping and supply lines. Whether economically driven or driven by a lack of items on the shelf, 10.5% of U.S. households experienced food insecurity at some point in 2020. With the increased uncertainty growing in the job market as a recession looms, those in lower income brackets who learned a harsh lesson in 2020 and 2021 are prioritizing food above other products in the coming year. At higher income brackets, toiletries seem to be a larger concern, given how regardless of income, some items just won’t be available due to supply line instability and brands being unable to meet demand in general during a recession.
Majority breakdown by annual salary
On a scale of 1-5, 1 being the most important
Less than $25,000
Food
Clothing
Toiletries
Tools
Cleaning products
Other
$25,000-$124,999
Food
Toiletries
Cleaning products
Clothing
Other
Tools
$125,000-$150,000+
Toiletries
Food
Other
Clothing
Cleaning products
Tools
Bulk shopping is a great way to insulate your spending patterns against a recession, as bulk purchases often provide access to lower prices and discounts not otherwise possible. We wanted to find out more about what types of bulk items people are planning to stock up on in the coming months to maximize their cash flow.
“At the point when a recession hits, many individuals will quite often build up on modest, reliably supplied items like bread or rice. Numerous things like these will usually be fair to create and rush to restock. Think canned food varieties, boxed merchandise, and frozen vegetables.”
—Steve Anderson, CEO, Junk Yard Near Me
“I will buy toiletry items in bulk. These include tissue papers, bath soaps, shampoos, and tubes of toothpaste. I will likewise purchase prescription medicines, as well as frozen food and vegetables.”
—Ryan Stewart, Founder, Webris
28% of consumers will be shopping for more sales and discounted items in preparation for a recession
As we discussed above, seeking discounts and sales will be a tactic that many of our respondents plan to leverage before the recession hits to reduce their spending now and shore up both supplies and a financial cushion affordably.
Of the types of sales they plan to seek out, brands should be aware that consumers largely prefer Buy One, Get One (BOGO) sales and coupons to straight-out price reductions. With the given oil price fluctuations, we don’t anticipate seeing gas prices returning to pre-pandemic levels any time soon, so expect consumers to seek out the lowest gas prices they can reasonably find in town. Online consumers will become much more price-aware as they shop and you will find consumers sorting according to price more than reviews or item popularity.
For many consumers, both on- and off-line, discount and loyalty programs can be fantastic tools for retention, as the gamification of the consumer experience that comes along with such programs can be a great way to engage and remain top of mind from a brand perspective while also providing access to loyalty-based discounts they are already seeking out.
Overall breakdown of methods
(On a scale of 1-6, 1 being the most important)
Look for more buy 1, get 1 free deals
Going to gas stations with lower prices
Couponing
Sort products from lowest to highest prices when shopping online
Becoming a rewards member
Other
Self-employed consumers are focusing on going to gas stations with lower prices. Meanwhile, consumers who are currently out of work and job hunting are leveraging couponing for greater discounts
For self-employed consumers, home-makers, and military who might spend a significant time traveling by car to go about their day, seeking out gas stations with affordable prices will be key strategies in their consumer behaviors as it allows them to make a significant impact to their overall spending with one single adjustment. People on fixed or limited budgets such as those unable to work, those seeking work, or students, will be seeking discounts of various types to reduce their overall spending on essential items.
| Majority breakdown by employment status | |
|---|---|
| Unable to work | Look for more buy 1, get 1 free deals |
| Self-employed | Going to gas stations with lower prices |
| Out of work and looking for work | Couponing |
| Employed for wages | Look for more buy 1, get 1 free deals |
| Homemaker | Going to gas stations with lower prices |
| Retired | Going to gas stations with lower prices |
| Student | Becoming a rewards member |
| Other | Couponing |
14% of consumers will be pausing non-essential subscriptions
The pandemic had people seeking out ways to remain engaged and entertained while they went about their workday as well as ways to save time and money in other ways, leading to an increase in both subscriptions to video streaming as well as meal kit services. As we explore how they might be minimizing spending in this category, it’s important to understand the importance ascribed to each type of subscription. With more households cutting out cable television services, it makes sense that video streaming services are one of the most important subscriptions our respondents plan to review the necessity of.
Overall breakdown
On a scale of 1-5, 1 being the most important
Video streaming
Meal subscriptions
Other
Fashion/cosmetic subscriptions
Health product subscriptions
Most male respondents noted that they’ll pause video streaming services, while female respondents said that they’ll pause meal subscription services
During the pandemic, people sought subscriptions for either entertainment purposes or to provide themselves with time-saving services. If a recession hits, consumers won’t have the same limitations socially that they did during the pandemic, so eliminating video streaming services for men means they’ll likely leverage other more affordable services for entertainment.
Because we can shop in stores again, people can take advantage of cheaper products in-store with a little pre-planning and a strategy in place. This will only hold, however, if supply lines for basic food items remain reliable. If food items become difficult to find or are expensive in the store, consumers will reconsider maintaining meal subscription plans simply because such plans provide reliable access to food items at a set cost that consumers can easily plan their budgets around.
Breakdown by gender
Male Consumers
Video streaming
Fashion/cosmetic subscriptions
Other
Meal subscriptions
Health product subscriptions
Female Consumers
Meal subscriptions
Video streaming
Other
Health product subscriptions
Fashion/cosmetic subscriptions
Our lives are increasingly filled with subscription-based services, from meal kits to streaming content, but with a recession on the horizon, many of our respondents plan to treat these services as non-essential and pause them until conditions stabilize. Some respondents, however, view subscriptions as a necessary coping tactic.
“I would consider pausing subscriptions to my least-watched TV services. I’ll evaluate whether I use one app more than another and choose the one my household likes the best to keep using.”
—Shawn Laib, Insurance Copywriter, Clearsurance.com
“At the very least, you should get rid of subscriptions that you don’t use often. For example, if you have subscriptions to Netflix, Hulu, HBO Max, Disney+, Paramount+, and Peacock, figure out which one to three platforms you use the most, then get rid of the others. You can even see if you have friends or family members that are willing to share accounts with you so that everyone can save money.”
—Carter Suethe, CEO, Credit Summit Consolidation
8% of respondents plan to purchase more items online than in person throughout the remainder of 2022
The fact is that the shift to remote and hybrid work arrangements made many individuals feel comfortable leveraging time-saving delivery services. Despite recent recovery from the pandemic in many communities, large portions of the population working from home some portion of the week remain. High gas prices throughout the first half of 2022 left consumers more willing to rely on delivery services or, at the very least, online order-ahead services.
Overall breakdown
On a scale of 1-4, 1 being the most important
Grocery/pharmacy store delivery
Health and wellness websites
Ecommerce websites
Other
A majority of male consumers intend to leverage online e-commerce stores more heavily while female consumers will increase their usage of grocery/pharmacy store delivery
With COVID-19 mandatory quarantines and lockdowns, school and office closures, unplanned visits to the doctor, and other hard-to-anticipate events throughout the week, online shopping allows consumers to better plan their otherwise uncertain days around deliveries rather than having to work into their uncertain schedules time-consuming essential chores and shopping tasks. While your household might divide up shopping tasks much differently, our male respondents were more likely to lean on eCommerce shopping for essentials and supplies, while our female respondents were more reliant on online platforms to schedule grocery and pharmacy deliveries for the household.
In either case, the ability to order what you need and proceed with your day without disruption gives consumers a degree of control in planning out their day which is necessary given the other uncertainties we outlined in a previous section above.
Breakdown by gender
Male Consumers
Ecommerce websites
Health and wellness websites
Grocery/pharmacy store delivery
Other
Female Consumers
Grocery/pharmacy store delivery
Health and wellness websites
Ecommerce websites
Other
On the other hand, 7% of consumers will be purchasing more products in person than online
Not all consumers rely on online channels for shopping. In some cases, the convenience of online shopping doesn’t always offset the added costs vendors add in terms of delivery fees, and shoppers feel more accountable when shopping in person. Shopping in person allows us to ensure the quality and accuracy of our orders and find affordable alternatives at the moment if product availability is an issue.
Throughout the pandemic, quarantine and social distancing requirements forced individuals to rely on online shopping to acquire daily essentials. This trend was so strong that many brands throughout the pandemic pivoted to expand into eCommerce to retain customers and survive the economic uncertainty. According to the insight we gained from our online inquiries, online shopping will be a go-to if a recession does strike, as people strive to save on gas and other costs where they can.
“For most of us, the habit of idle online shopping became a consequence of the almost two-year quarantine, and I do believe it builds up to a large dent in our wallets. For this reason, I would start shopping in person. The value of the items I purchase feels more real when I’m at the store rather than having the idea of unlimited credit creeping in when I shop online.”
—Huda Usmani, Content Writer, Everything Turf Pros
“I’ll shop more online because I can use discount coupons. Many brands have special offers for regular customers, so I’ll take advantage of them. Also, it helps save money on traveling.”
—Amy Wampler, CEO, Spartan Mechanical
“In terms of shopping, I’d shop where I could find the best deals. That’s usually online for me, but I’d be willing to shop in person if I could save a little bit.”
—Michael Bell, Founder & CEO, Manukora
A majority of consumers ages 18-24 will be reducing their recreational spending on tech products. In contrast, 35-54-year-old consumers are cutting back their spending on eating out at restaurants and/or food delivery
As mentioned, younger consumers are still engaged with their parents’ households or arranging to live with roommates to control costs, both situations where meals and food delivery are technically household concerns, leaving discretionary and recreational spending to other categories such as technology. This demographic has shown that they are willing to reduce their consumption of tech products during a recession, allowing them to focus financial resources on household necessities and other obligations.
Millennials and Gen-Xers in the 35-54 demographic recognized a need to reduce their reliance on eating out and food delivery such as Uber Eats and GrubHub to save money. This trend will largely depend on inflation’s effect on the cost of commodities, and the offset delivery costs have on the opportunity costs provided by the convenience of delivery.
Overall breakdown
On a scale of 1-10, 1 being the most important
Eating out at restaurants and/or meal delivery (DoorDash, UberEats, etc.)
Home decor
Tech products
Clothing and/or accessories
Recreational events (sporting events, concerts, movie outings, etc).
Beauty treatments
Travel/vacation
Outdoor/athletic gear and activities
Gym memberships
Other
| Majority breakdown by age |
|---|
| 18-24 years old – Tech products |
| 25-34 years old – Clothing and/or accessories |
| 35-44 years old – Eating out at restaurants and/or meal delivery (DoorDash, UberEats, etc.) |
| 45-54 years old – Eating out at restaurants and/or meal delivery (DoorDash, UberEats, etc.) |
| 55+ years old – Beauty treatments |
31% of respondents overall currently have a recreational monthly budget of $51-$100 per month. 48% of the respondents noted that they’ll decrease their recreational budget to less than $50 per month during a recession
Consumers recognize the need to maintain some degree of a recreational budget, but they are willing to decrease that expense line to make ends meet. This is only a sustainable tactic for consumers with an extremely strict handle on their finances, so a great way to add profit to your balance sheets in preparation for a recession is to speak to these individuals and retain their business by shifting your messaging to ensure your company’s product or services is seen as more of an essential item than one they lump into their recreational budget.
| Current Budget | Recession Budget | |
|---|---|---|
| Less than $50 | 25% | 48% |
| $51-100 | 31% | 29% |
| $101-$250 | 29% | 17% |
| $251+ | 15% | 6% |
A majority of consumers plan to decrease their monthly recreational budgets regardless of their employment status
The rhetoric warning of the impending recession is so strong that it has forced consumers across all employment statuses to hunker down and assess their financial readiness to face long-term economic instability. The advantage many consumers have is that they’ve already minimized their budgets over the last two years due to the pandemic, so adjusting their spending now is a natural response to market conditions they’re already primed to make.
Majority breakdown by employment status
| Current Budget | Recession Budget | |
|---|---|---|
| Unable to work | Less than $50 | Less than $50 |
| Military | $101-$250 | $51-100 |
| Self-employed | $51-100 | Less than $50 |
| Out of work and looking for work | Less than $50 | Less than $50 |
| Out of work and not currently looking for work | $51-100 | Less than $50 |
| Employed for wages | $101-$250 | Less than $50 |
| Homemaker | Less than $50 | Less than $50 |
| Retired | Less than $50 | Less than $50 |
| Student | $51-100 | Less than $50 |
| Other | $101-$250 | $51-100 |
The chance of a recession has many respondents second-guessing a great many of their current recreational and non-essential purchase behaviors, given the uncertainty of how the economy will behave.
“I would reduce my recreational spending. Instead of going out to eat or to the movies, I would stay home and cook meals from scratch, and watch movies that I already own.”
—Joshua Haley, Founder, Moving Astute
“I’d hold off on large purchases such as properties and cars during a recession. It’s essential to save during this time, and these purchases do the exact opposite of that. Also, I’d avoid buying clothing items or dining out. Both these purchases are unnecessary and cost a lot. Instead, you can save money by thrifting or cooking at home.”
—Patrick Wilson, Hiring Director, SkillCourses
Consumers have thought a lot about how they are going to navigate and survive a recession in the coming months, given how fresh the pandemic is in our minds, it’s no wonder that many are focused on the same product elements of quality, value, and brand response to the social crisis of the pandemic. That’s why we also asked our respondents: How will consumers’ brand loyalty be impacted by another economic crisis?
Consumer Brand Loyalty
19% of consumers overall stated that they’re most inclined to stay loyal to the brands that they’ve been using the longest during a recession
For consumers, brand loyalty became increasingly important during the pandemic, but largely only towards brands that showed a willingness and ability to remain engaged with the community and willing to take care of their employees during uncertain economic conditions.
This trend will likely continue if another recession strikes, but consumers are willing to remain with brands they already trust. That means it’s vital to establish strong relationships with your consumer base now while they are still willing to engage with your brand and haven’t reached a point where they need to consider their options.
19% – Brands that I’ve been using the longest
14% – 100% American-made brands
12% – Brands that give back to the community
11% – Eco-friendly brands
11% – Brands with the most positive reviews/referrals
9% – Brands that foster and promote diversity, fairness, and equality
8% – Brands with a motivational, re-assuring, and positive company missions
8% – Brands that support my political beliefs
5% – Celebrity endorsed brands
3% – Other
Data, facts, and figures can’t always tell the whole story, especially when it comes to something subjective, like brand loyalty. So we put the query out to our wider community of business professionals to find out how a recession might change their buying behaviors and habits.
“During a recession, I stay loyal to my ‘tried and true’ brands. These brands I’ve been using for years have never left me down. This is especially true for skincare items and other types of items I don’t want to risk experimenting with. I would switch out some of my more expensive clothing brands though. For instance, if I can find expensive leggings ‘dupe’ for less with excellent reviews, I would give them a try. If I hear something is great and it’s less expensive than what I currently buy, I’d test them out during a recession.”
—Melanie Edwards, Senior eCommerce and Digital Product Manager, OLIPOP
“To remain with a brand, the most important factor for me would be if the brand had a product that produced value and longevity. I can commit to a brand that has a high-quality product and won’t cause me extra headaches after the purchase. I also would be more likely to remain loyal to a brand that’s actions reflect they understand a recession is hard on people that purchase their product. This could look like price cuts, referral bonuses, and/or extra perks or benefits for investing second-guessing. As far as if I would trade out known products for new ones, If I felt that a new brand offered better value and a better connection, yes, I would make the trade. Part of keeping my business and loyalty is about working hard to understand my wants and needs as a consumer. Whoever does that better is going to win out on my hard-earned resources.”
—Michael Taylor, Founder, Shifting Shares
“If a recession occurred, I would try my best to stay loyal to local brands to support them during these times. Larger companies have a better chance of surviving a recession than smaller businesses, which is why they need our support the most. I would also try to stay loyal to the brands that I love like Kirkland from Costco as these brands offer good quality items for a decent price.
These types of wholesale stores are helpful during times like a recession as they offer bulk items at more affordable prices so you can stock up on necessary items. As for alternative products or new products, I would certainly consider dropping brand name items for cheaper alternatives as many of these store brand name items are just as good of quality. You have to make tough choices when you are trying to save money, and if it means having to change up my normal shopping trips to compensate, then I will. For certain brands of skincare and makeup, I might not be so quick to change things up. I would try to make smarter decisions and do what I could to save money, but I also know there are some things that I really can’t do without that only certain higher-end brands carry. Although these aren’t technically necessities, they are still items I plan to buy and will support those particular brands.”
—Rose Wismans, Founder, FudgeMyLife
Many factors affect how loyal to a product a consumer remains, regardless of market conditions. Establishing strong relationships with your current clients now will go a long way towards securing their business in the future, and having them act as brand advocates in the event of market instability can even help gain or retain business while the competition struggles to keep up.
With Consumers Already Preparing for A Recession, Have You Laid the Foundation for the Challenges Ahead?
For those with little understanding of the combined socio-economic forces in play that are driving us towards a recession, the fears of an impending recession have been driven largely by political posturing, and many are looking to the Biden administration for answers, if not relief. In the short term, forecasts show that there is no slowdown in sight and that downturns in the financial market will continue to play havoc with the supply chain. Policymakers will continue to rely on monetary policy to steer conditions towards a cooldown and hopefully bring high inflation under control.
If you’re concerned that your brand isn’t prepared to meet the demands of changing consumer behaviors, you can meet with a marketing consultant today to put a plan in place to survive in the uncertainty ahead. UpCity’s marketplace of B2B service providers is a great place to find the support you need across business processes to ensure you’re ready to handle whatever the remainder of 2022 and the start of 2023 have to throw at you.
UpCity’s Survey Method
UpCity used Pollfish to survey 600 U.S. consumers on how they plan to adjust their spending habits in preparation for an upcoming recession.
Forty-eight of the respondents are male and fifty-two percent of the respondents are female.
A majority of the male respondents are 25-34 years old (34%), earn $150,000 more per year (21%), and are employed for wages (62%).
A majority of female respondents are also 25-34 years old (31%), earn between $25,000-$49,000 per year (28%), and are employed for wages (43%).