Brand Strategies for Consumer Spending Habits in 2023

We’re almost halfway through the year, and consumers are still feeling the impact of economic uncertainties in their daily lives.

They’re often budgeting and remain cautious with their spending. At the same time, consumers are more intentional with discretionary purchases. They’ll try to reasonably indulge or find affordable luxuries that bring them joy. These paradoxical spending habits are reflected in three consumer trends we expected in 2023 – Budgeteers, Eco Economic, and Here and Now.

Shoppers will continue to maximise the value of their purchases for the foreseeable future. In this article, you’ll see new stats on consumer spending and saving habits as well as potential brand strategies to consider that can cater to their priorities.

New consumer spending habits

According to Euromonitor International’s Voice of the Consumer: Lifestyles Survey 2023, 74% of consumers are concerned that the cost of everyday items they buy is going up, while 32% are concerned about their financial situation.

With economic uncertainty, the cost-of-living crisis has led consumers to save money in new ways, like trading down to private label brands or shopping more at discount stores just to maintain living standards.Consumers are methodical with their spending, buying what matters the most and offers the best value.

There are several implications that you need to consider in the current economic reality. Brands face complex challenges through which they must find opportunities to fulfil consumer demands, especially for greater value for money solutions, while making profit.

How brands can adapt

Brands need to communicate their value clearly to remain relevant to consumers who are spending cautiously. Here are a few ways you can respond to varying consumer demands and spending priorities.

Flexible payment options

Companies offering flexible and cost-effective options like Buy Now Pay Later (BNPL) payment plans allow budget-cautious consumers to stretch their money. Fintech companies, traditional financial players, retailers and brands are innovating to allow consumers seamless and convenient payment solutions to shop.

BNPL player Klarna continues to expand and evolve with the times to create value for merchants and consumers alike. It acquired mobile wallet provider Stocard in 2021, incorporating new loyalty card features in its app to further enhance value for consumers.

Apple Inc launched new features in Apple Pay in 2022, including Apple Pay Later, its take on BNPL. This lets its customers split a purchase into four equal payments over six weeks without any interest or fees. Business that understands that while consumers may be forced to cut back, they don’t want to set back. Responsible gratification and flexible payment options such as Apple Pay Later expand purchasing power while alleviating cost pressures to spend on happiness now.

Loyalty or rewards programmes

Loyalty programmes act as an essential tool to keep consumers engaged for long-term relationship building. By offering perks such as exclusive sales, redeemable points for discounts or complementary products and free samples, consumers are encouraged to keep the brand in their evoked set whenever shopping.

Sephora’s rewards programme provides exclusive member benefits such as offering special gifts on birthdays or member-only event invites. Data and back-end algorithms can be integrated by businesses to spot patterns through loyalty programmes that encourage shopping motivation and tailor promotions.

New retail models

Product bundles, direct-to-consumer models, rental, and resale model options help brands deliver savings while retaining customers. Brands can also develop strategic partnerships to merge or expand resources, produce affordable goods, or offer special discounts for this.

US-based online discount retailer Martie offers 40-70% off the normal retail value by reselling overstocked items unsold elsewhere. Martie combines competitive pricing with the convenience of online shopping, helping consumers be more resourceful and economical.

Spark joy

Brands that understand the importance of and leverage emotions, sparking joy, health, and wellness elements that their products and services can bring to consumers, are to benefit, ensuring that the brand remains in consumers’ evoked set while shopping.

Starbucks and Delta Air Lines synced their loyalty programmes to deliver additional experiences to loyal customers. The collaboration is to create memorable experiences through interchangeable redeemable points for coffee and airline travel for holidays, showing genuine care for consumers.

How these strategies apply to three consumer trends in 2023

Creating a Win-Win Scenario

You need to be attentive, understanding and adaptive to evolving consumer spending habits. This can be done through consumer trend analysis with deep-dive into insights and foresights to optimise product portfolios, pricing and brand positionings as part of your strategy to remain relevant and maintain profits. You can download our white paper to get the full list of 2023 trends and business recommendations.