News that consumer confidence has fallen to a 12-year low won’t come as any surprise to US retailers. Economic uncertainty has been the norm since the COVID-19 pandemic. Retailers have gotten used to consumers being cautious and sales volumes treading water. But since last November’s elections, confidence ratings have fallen for four months straight.
Retailers find themselves trapped between a rock and a hard place. On the one hand, tariffs on imports are adding yet another cost burden that is squeezing margins. On the other, even if they can hold off on putting up prices to counter rising costs, consumers are reining in spending because they expect prices to go up.
It’s a tough place to be. We’re already seeing reports of major players writing down growth forecasts, or announcing significant cost-cutting exercises such as store closures. Survival is the objective. So what can you do when customers are increasingly reluctant to spend?
Understanding Your Customer’s Mindset
First things first – to keep consumers engaged in these trying times, retailers need to show customers they understand where customers are coming from. Make a big deal of holding prices, or offering discounts and incentives where you can. Make your audience feel that you’re on their side.
Beyond that, you should try to link that into broader conversations about your customers’ needs right now. What does scaling back spending mean to them? What purchases are they still prepared to make? Are they delaying bigger purchases, focusing only on essentials, or actively seeking out bargains? You can do this via social media, or by running surveys on your websites or via email marketing. Understanding your customers’ priorities will help you adjust your offerings and promotions effectively.
Fine-tune Your Marketing Strategy
In uncertain economic times, generic marketing won’t cut it. As already mentioned, consumers are looking for clear value, so your messaging needs to reflect sensitivity to their financial concerns. But value will mean different things to different people. This is really the time to double down on the quality of your marketing output, to really drive engagement and position your products as affordable, smart investments. But this is also a time when pushing the boat out on personalization can reap big dividends, by answering customer needs at an individual level.
Create an Engaging Store Experience
Low consumer confidence means you can’t rely on customers flocking to your store because they feel the bucks burning holes in their pockets. You need to give them more reasons to step through your doors. Think creatively – host events, workshops, or demonstrations that bring people into your space. These activities don’t have to be expensive but should add genuine value. For instance, grocery retailers could host free recipe demonstrations, clothing retailers complimentary styling sessions. Making your store more experiential will draw customers in, even when their instinct is to curb spending.
Demonstrate Meaningful Brand Values
When budgets are tight, consumers prefer brands that resonate personally and ethically. Emphasize what your brand stands for. Whether it’s sustainability, local community, or ethical sourcing, clearly communicate these values. Customers feeling cautious about spending want reassurance that their purchases support meaningful causes and responsible practices.
Rethink Loyalty
Consumers low on financial confidence are much more likely to stick with what they know in terms of choosing where they spend their money. Right now it’s even harder than usual for retailers to attract new customers. But you can roll with that by pulling out all the stops to look after your existing customers and get maximum value from repeat business. This is a good time to revisit your loyalty program – how relevant is your rewards system? Does it answer the present needs of your customers? Can you make it more flexible? Can you make rewards more immediate? Can you personalize the benefits members get?
Embrace Tech Without Risking Your Margins
Finally, tech can be your friend in supporting all the above suggestions. And it doesn’t have to require big investments that feel too risky in these difficult times. Simple tactics like using customer data to send tailored product recommendations or personalized follow-up messages can significantly boost repeat sales. Consider adopting accessible tech like chatbot support at kiosks or enhance your checkout experience with flexible payment options. Small investments can still have a substantial impact on customer satisfaction and retention.