While news headlines continue to focus on the economic rollercoaster that has so far marked the decade, two fresh reports, commissioned by PayPal, show consumers are holding tighter to their earnings and shopping with the expectation that retailers will meet them in the middle. However, while retailers are keen to help, they are often out of touch with what their customers really want.
Staying focused on customer needs
According to the Evolution of Commerce Report, consumers want practicality from their brands meaning a focus on affordability, clear and detailed product information, trusted reviews from other customers, guarantees about authenticity and protection from counterfeits. But brands seem keener on wider purpose and innovation, sustainability and social awareness. They also want to be seen as cutting edge and innovation can’t stand still but, in this uncertain climate, brands need to refocus to match their consumers’ changing needs.
Closing the gap between expectation will be important as 54% of consumers surveyed are looking to cut down their discretionary spending. Nearly half (43%) are budgeting for spending in general meaning that every penny spent is scrutinized for value.
“While shopping at retailers who have ethical business practices is certainly important, it’s no surprise that in the current economic climate, customers first want to know that they can afford the products they’ve come to rely on,” said Cameron McLean, Senior Vice President, Europe and Australia Enterprise at PayPal. “Today’s consumers are savvy and are looking for transparency. They want to have all the information they need before spending their hard-earned money and want access to product reviews to make sure that their money won’t be wasted.”
Despite the gap in priorities, 95% of business leaders surveyed in the report said they were prepared to meet the current challenges, though most of the changes they had made were around operations and innovation such as expanding their omnichannel capabilities, exploring new markets and optimising procurement.
Buyers and sellers have common ground: empathy
With these stresses in mind, consumers are looking to brands to act with compassion and empathy toward their struggles. People would find cost-cutting measures like free shipping and returns (60%), as well as promotional discounts (49%) particularly helpful1.
Interestingly, empathy works both ways. While they want help, consumers understand that brands are also under pressure. They’re willing to give companies more leeway, specifically around stock outages or longer delivery times.
Savings by Design: Value, Redefined
Economic uncertainty is forcing many people to re-evaluate their priorities. Brands need to pay attention: 34% fail to justify their current price1 and shoppers are switching up their behavior — trying private and own-label, or second-hand.
According to Think Forward, another report recently released by PayPal, shoppers appreciate brands that help them save — and that expectation will outlast the current cost-of-living crisis. The report gives examples of businesses, that react and adjust to this need.
For example, Carrefour has added an anti-inflation button to its e-commerce site, enabling shoppers to easily find between two to six cheaper alternatives across 8,000 products. According to the company, in 21% of cases, consumers replace the original item with a substitute offered by the algorithm.2
Another example is helping customers to resell the goods they no longer need. Businesses that embrace these circular practices can offer consumers savings and sustainable options while potentially reducing their environmental impact. Many global retailers have turned to resale as a strategic business priority.
Turning buyback and resell schemes into a revenue stream is one way these businesses are ensuring their value proposition is poised for resilience, meeting consumer demands both now and in the future.
Learn more about current customer needs and how businesses are helping people redefine value amidst economic instability in the Evolution of Commerce report and The Role of Brands: Empathy in Uncertain Times, the first report in our Think Forward with PayPal series, is available to download below.
The content in this article is provided for informational purposes only. You should always obtain independent business, tax, financial and legal advice before making any business decision.
Download Think Forward Report
Download Evolution of Commerce Report
1 Brand: your first defense against rising prices, Kantar, Jul 2022
2 Le Parisien, Carrefour lance un ‘bouton anti-inflation’ en ligne pour aider les consommateurs à acheter moins cher, Nov 2022
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