Consumer Behavior And Economic Trends

I’ve been headhunting in the CPG industry for the past decade, and I’ve never seen a post-inflation market like we’re in right now. For the past three years, customers have been capitulating to price hikes by extending their budgets. But now, they’re at a breaking point. American families, already tethering on edges of their budgets, do not have the ability or the desire to expand their budget in order to accommodate increased prices. I’m sure you’d agree with this, because my family certainly does. With grocery bills through the roof, we’d rather skip on groceries and essentials rather than paying a premium right now. A couple things led us here, starting the pandemic and the post-pandemic impact on spending and savings. Secondly, the wave of AI and tech developments that caught us off guard. So, where do the companies go now? Once the “price increase” playbook is done, CPG brands can only win in both value and volume by shifting gears. In my chats with executives, I’m sensing a change in tone. To stay competitive, they’re looking for ways to shift from the post-pandemic survival mindset to a growth-focused one that accommodates the customer as well. Rather than hiking prices, the focus is now on bringing down costs, and getting to terms with consumer’s limited budgets and increasing product choices. Layoffs aren’t the only way to bring down costs. In my view, CPG companies do have the leeway to embrace data-driven innovation and efficiency to cut costs. Here are some of the ways in which companies can use AI and ML to achieve targets in 2025 and beyond: 1/ Predicting the demand: Post-pandemic behavior is tough to predict, especially in CPG markets. With AI, the companies can now leverage real-time insights from sources like point-of-sale systems, social media, and even economic indicators to see future trends more clearly. PepsiCo, uses Tastewise to track what consumers are eating across 60+ million touchpoints and making decisions that align with local preference. 2/ Inventory management: With AI-powered predictive analytics, companies are now turning inventory management into a science. Procter & Gamble’s Supply Chain 3.0 initiative is one example of this shift. 3/ Increased personalization: Leaders are tapping into geographical intelligence to connect meaningfully with audiences. Estée Lauder has a voice-enabled makeup assistant for visually impaired customers, reaching a new market while boosting brand loyalty. Bottom line is: customers are no longer meeting brands where they’re at. It’s high time that companies start caring about customers and their shrinking bottom lines. Are you excited to see your grocery bill go down in the next few months? #CPG #AI #ML #fmcg #marketing #trending

At airtel, I ran an iPhone giveaway marketing campaign three times, and to my surprise, none of them performed. Logically, you’d think offering a prize as attractive as an iPhone, especially during the launch period, would drive massive engagement. The assumption is that everyone would rush to participate, download your app, engage with the campaign, and complete the required actions. But what actually happened was the opposite. Engagement was shockingly, embarrassingly low. In contrast, campaigns that offered much smaller rewards—like a ₹1,000 or ₹500 voucher, or even just a free mobile recharge—generated higher participation rates, more app downloads, and greater overall engagement. But why does this happen? This outcome can be largely attributed to consumer psychology. When the reward seems too large or unattainable, people instinctively doubt their chances of winning. The concept of *perceived probability* comes into play here. When the prize is something as high-value as an iPhone, people immediately think, "What are the odds that I’ll actually win?" This skepticism causes them to disengage and not even bother trying, as they don't see the reward as realistically achievable. On the other hand, smaller, more attainable rewards feel within reach. A ₹1,000 voucher or a free recharge doesn’t carry the same sense of improbability. People feel like they have a real shot at winning something smaller, which encourages them to take the necessary actions, leading to better campaign results. In essence, psychology plays a far more critical role in shaping consumer behavior than we give it credit for.

The tariffs are in. So what’s next? 25% on imported vehicles. Auto parts, including engines and transmissions are next. This isn’t theory anymore. It’s happening. Roughly 46% of vehicles sold in the U.S. last year were imported. That’s almost half of the new car market now hit with an added cost. Some automakers are more exposed than others. Wall Street’s already reacting. Forecasts show earnings getting hit. Margins thinning. Volatility rising. So where does that leave us? At Honda and Acura, the impact is real, but it’s not the full story. → Honda’s been building cars in the U.S. since 1982. → Acura’s key models (the MDX, RDX, TLX) are all assembled in Ohio. → Roughly 70% of the vehicles we sell here are made here. That matters. But even “U.S.-built” doesn’t mean fully U.S.-made. Parts come from dozens of countries. No automaker is insulated. So what now? We don’t spin. We prepare. Here’s how I’m thinking about it as a dealer: 1. We need to lead with transparency. → Customers will ask questions. Some already are. → Don’t sugarcoat it. Don’t dodge it. → Explain the facts. Educate them. → Let them know which models may be affected. Which ones aren’t. 2. Be ready for price sensitivity. → $48,000 was already the average new vehicle price. → Now some are predicting up to $10K increases. → It’s going to impact how people buy, especially in the entry-level segments. → Think CR-V, HR-V, Civic, even Accord depending on build location. You’ll need to help customers rethink what value means. Payment, reliability, longevity. Show the total picture. 3. Train your teams and fast. → Sales need new focus. → F&I need sharper offers. → Service should expect more questions about parts availability and pricing. → Parts managers need to rethink sourcing if tariffs shift the cost curve. Every department is affected. So every department needs to be ready. 4. Control what you can. → We can’t control trade policy. → But we can control how we respond, how we show up, how we lead. Your culture, your inventory mix, your pricing strategy, your customer experience and that’s where the real work is. This isn’t about panic. It’s about preparation. Customers want confidence right now. So give it to them with facts, with clarity and with a calm plan forward. No noise. No drama. Just real leadership. — Brian ————— “Everything will be OK in the end, and if it’s not OK, it’s not the end”. ~ John Lennon

You feel it in surveys first. Then you see it in earnings. 📉 Consumer sentiment has been sliding for months. Now it’s showing up in the numbers. PepsiCo just reported a revenue and profit decline, cutting its full-year forecast. Their CFO summed it up bluntly: “Relative to where we were three months ago, we probably aren’t feeling as good about the consumer now.” Translation: : ⚠️ The vibe is off. And it’s not just Pepsi: 🌯 Chipotle posted its first same-store sales drop since 2020. 🧺 Procter & Gamble says Americans are doing less laundry to save on detergent. ✈️ American Airlines and Delta Air Lines pulled full-year guidance, citing volatile travel demand. This isn’t a single company issue - it’s a sentiment shift at scale. From burritos to beverages, laundry loads to leisure travel - the pullback is emotionally driven. Not because wallets are empty, but because confidence is. And that brings me to one of my favorite niche fascinations: The weirdest recession indicators economists have tracked over the years. The ones that don’t show up in government data sets but do show up when your friend says “I’m just rewatching The Office again” and you understand something deeper is happening. 💄 The Lipstick Index: Coined by Estee Lauder's chairman during the early 2000s downturn. When times are tough, consumers skip big luxuries and go for small pick-me-ups, like a $12 lipstick instead of a $1200 handbag. Emotional arbitrage. 🩲 The Men’s Underwear Index: Alan Greenspan said it, not me. The theory goes that men delay underwear purchases when things are bad, because it's invisible and, let’s face it, not a priority. So if sales dip, watch out. 👗 The Hemline Index: A 1920s theory suggesting hemlines rise during economic booms and fall during downturns, supposedly because modesty (and practicality?) take over. 💅 The Mani-Pedi Barometer: Beauty services are often first on the chopping block when money gets tight. If your nail tech has open slots all week, it might be time to rebalance your portfolio. 📺 The Comfort Binge Effect: Streaming platforms like Netflix have noted spikes in rewatching comfort shows (Friends, The Office) during economic downturns. Less experimentation, more regression to the emotional mean. The economy doesn’t break all at once. It frays at the edges - in nail salons, snack aisles, and streaming queues. Anyway, I’m off to rewatch Friends instead of doing my laundry and make sure my hemlines are recession-appropriate.

I’m delighted to launch our latest thought leadership research with Transportation, Shipping, & Logistics at Amazon, looking at how delivery can drive loyalty. 🔍 Our pan-European analysis across UK, Spain, France and Italy uncovered some super interesting insights. For one (see graph), the affluence-age relationship isn't just a demographic split – it's aligned to a lifetime value predictor that’s heavily influenced by delivery. Knowing which consumer cohort to target and how, is a critical component of profitability. The data highlights a growing divide in consumer behaviour, emphasising the need for a tailored approach: agile, customer-centric delivery for the younger, affluent segments, and value-driven strategies to attract and convert older, more cautious shoppers. Another way of identifying target cohorts is to look at repeat purchases. Our research reveals a clear trend: affluent GenZ and Millennial shoppers not only buy more frequently, but also exhibit higher loyalty. From these cohorts, fast and convenient delivery options are crucial to capture their repeat business. Conversely, older and less affluent consumers are more price-sensitive and cautious, indicating a different value proposition is needed to engage and retain them. 🎯 The Strategic Imperative: This isn't just about who's buying more – it's about the fundamental reshaping of retail economics: 💥 The Loyalty Multiplier Effect: When high-affluence millennials increase their purchase frequency, they don't just buy more – they create a compound growth effect. Each additional delivery satisfaction point translates to a higher likelihood of repeat purchase. 💥 The Hidden Cost Dynamic: Less affluent customers show more price sensitivity, suggesting a different value proposition is needed to engage and retain them. When retailers align delivery pricing with segment-specific price thresholds, they can potentially reduce the cost to serve by consolidating consignments or extending delivery windows. Smart delivery segmentation can be a profit opportunity when mapped correctly to purchasing power. 💥 The Generation Bridge: The 35-44 affluent segment isn't just buying more – they offer foresight into the behavioural patterns that are likely to cascade down to other segments. Their behaviours today provide a glimpse into tomorrow's consumers in terms of life-stage, omnichannel behaviour and loyalty drivers. Ultimately, delivery options require a tailored strategy depending on the customer. There is no one-size fits all. Our report with Amazon Shipping is packed full of more insights so download for free and take a look! Download our FREE report now 🔗 https://lnkd.in/eJnCu3wW

While I was waiting for contractors to begin the renovations, I had a chance to dive into the latest Feedvisor data for the 2025 consumer behavior report. Clearly, we're navigatng the price wars and trust tsunamis in the U.S. I check this report every year, especially after the longest Prime Day event we had just a few days ago, I'm looking forward to next year's issue with extended "high-velocity events" like this one. With 79% of shoppers comparing prices before buying (and 66% doing it obsessively), the battlefield is clear: value reigns supreme, but trust seals the deal. Here's my breakdown of key insights and I'll leave you with few tactics to propel your brand into the AI-accelerated future of retail. ++ 𝗞𝗲𝘆 𝗜𝗻𝘀𝗶𝗴𝗵𝘁𝘀 𝗳𝗿𝗼𝗺 𝘁𝗵𝗲 𝟮𝟬𝟮𝟱 𝗖𝗼𝗻𝘀𝘂𝗺𝗲𝗿 𝗕𝗲𝗵𝗮𝘃𝗶𝗼𝗿 𝗥𝗲𝗽𝗼𝗿𝘁 ++ 📍Amazon continues crushing product searches at 80%, followed by Walmart (50%) and Google (42%). But watch the disruptors: Temu (17%), SHEIN (14%), and TikTok (11%) are stealing share with impulse-driven, low-cost vibes. 📍Inflation tops the charts at 49% influence (down slightly but still king), edging out deals/discounts (46%) and budgets (35%). Prices are up 20% since 2022, hitting Gen Z, Millennials, and Gen X hardest—especially childless households feeling the squeeze. 📍Personal recos dominate—family at 80%, friends at 76%—far outpacing influencers (55%). Customer reviews (31%) and influencer videos (11%) are gaining, but authenticity is non-negotiable. 📍Social channels (Instagram 40% low-spend, Facebook 39%, Pinterest 54%) fuel quick, sub-$50 buys, while retail giants like Amazon (21% high-spend) and Walmart (30%) capture big-ticket loyalty. 💡Price comparison? Amazon leads at 81%, Walmart 56%, Google 36%—proving one-stop shops win. 📍Temu and Shein are impulse magnets with 39% and 32% low-spend users, but only 10-14% going big, signaling opportunity in upselling. ++ 𝗧𝗮𝗰𝘁𝗶𝗰𝗮𝗹 𝗥𝗲𝗰𝗼𝗺𝗺𝗲𝗻𝗱𝗮𝘁𝗶𝗼𝗻𝘀 𝗳𝗼𝗿 𝗖𝗣𝗚 & 𝗙𝗠𝗖𝗚 𝗕𝗿𝗮𝗻𝗱𝘀 ++ 1. AI-powered price optimization is your friend on eCom Titans. Integrate dynamic pricing algorithms on Amazon and Walmart to match real-time competitor scans—expect 15-20% uplift in conversions by auto-adjusting for inflation waves. 2. You've got to conquer disruptor channels. Scale TikTok/Shein/Temu with short-form, AI-generated content for impulse buys—project 25% new customer acquisition by blending gamified deals with influencer caution (focus on micro-influencers with 70%+ authenticity scores). 3. Leverage Web3 communities for family/friend referral programs with NFT rewards; aim for 30%+ boost in loyalty by embedding AR try-ons tied to user-generated reviews. 𝗧𝗼 𝗮𝗰𝗰𝗲𝘀𝘀 𝗮𝗹𝗹 𝗼𝘂𝗿 𝗶𝗻𝘀𝗶𝗴𝗵𝘁𝘀 𝗳𝗼𝗹𝗹𝗼𝘄 ecommert® 𝗮𝗻𝗱 𝗷𝗼𝗶𝗻 𝟭𝟰,𝟳𝟬𝟬+ 𝗖𝗣𝗚, 𝗿𝗲𝘁𝗮𝗶𝗹, 𝗮𝗻𝗱 𝗠𝗮𝗿𝗧𝗲𝗰𝗵 𝗲𝘅𝗲𝗰𝘂𝘁𝗶𝘃𝗲𝘀 𝘄𝗵𝗼 𝘀𝘂𝗯𝘀𝗰𝗿𝗶𝗯𝗲𝗱 𝘁𝗼 𝗼𝘂𝗿 𝗻𝗲𝘄𝘀𝗹𝗲𝘁𝘁𝗲𝗿. 👇 Data source: Feedvisor #CPG #FMCG #ecommerce #AI

Wages and benefits are up, inflation and interest rates are down, and real incomes have been rising in the UK for almost 18 months now... But consumers aren't spending, and PwC UK's latest survey finds the *biggest quarterly decline* in consumer sentiment in over 2 years. Is the UK in a "#vibecession" like our US brethren seem to be? Some of my thoughts below, or read the full report: https://pwc.to/48mI0rA First of all, why does it matter? I've been running PwC UK's consumer sentiment survey since 2008, and the main index number has historically been a reliable predictor of actual household spending 6-12 months later (with an R-squared of +0.7 for you statisticians!). Sentiment has been recovering steadily since a low in Sep 2022... until now. In fact, as with previous changes of government, July's survey, taken directly after the General Election, saw #consumersentiment climb to its strongest level in 3 years. However, our latest September survey (https://pwc.to/48mI0rA) shows the biggest quarterly decline since the start of the Ukraine War, worse than after the Truss mini-budget of 2022. The new government's honeymoon is most definitely over in the eyes of consumers. The biggest decline in sentiment in the last quarter was amongst over 65s. For the first time in over 8 years, #pensioners are now the most pessimistic demographic group, reversing over a decade of improving sentiment amongst older people. The end of the universal Winter Fuel Allowance has had a *direct impact* on the sentiment of retirees. Meanwhile, the sentiment of under 35s actually rose - slightly - but no more than it normally does every September. Weak sentiment has been reflected in #consumerspending. According to the BRC, quarterly non-food retail sales have been in decline every month for over a year now. As MPC member Megan Greene pointed out in her Financial Times column earlier this week (https://lnkd.in/dUQA_3HF), UK consumption is just 1.5% above pre-pandemic levels vs 13% in the US. UK consumers are saving, but not spending. This fall in sentiment and continued aversion to spending is bad news for #retail and #hospitality as we enter their Golden Quarter. Christmas spending propensity amongst consumers has fallen since the summer, and is now no better than it was last year - 27% of us think we'll spend less this Christmas, compared with only 18% saying they'll spend more. Will the improving macro environment and more certainty after the Budget be enough to turn the tide? Whatever the Chancellor unveils next week, consumer sentiment looks to have peaked, and is now falling again. For retail and leisure operators, that means the critical run-up to #Christmas hangs in the balance. Where will the brighter spots of higher spending be? Read our prognosis in PwC UK's latest consumer sentiment report here: https://pwc.to/48mI0rA

Consumers Pull Back Spending as Core Inflation Creeps Up May’s PCE report just landed with a thud! At a time when the Federal Reserve is looking for disinflation momentum, the data showed the opposite: inflation remains stubborn, and consumers are beginning to retreat. Core PCE (the Fed’s preferred inflation gauge) rose 0.2% month over month, hotter than expected. Year-over-year, it ticked up to 2.7%, moving further from the Fed’s 2% target. Headline inflation held steady at 2.3%, but there’s little indication of downward momentum. The bigger story, however, may be the consumer slowdown. Personal income fell 0.4% in May. Disposable income dropped 0.6%. Real consumption declined 0.3%, marking the sharpest monthly pullback since last fall. Households spent less on goods (down $49 billion overall) with only a modest offset from a $20 billion rise in services spending. One of the most striking declines came in motor vehicles and parts, which plunged more than $40 billion in a single month. This data comes from the Bureau of Economic Analysis as part of its monthly Personal Income and Outlays report. The PCE (short for Personal Consumption Expenditures) is not to be confused with CPI or PCI. It is chain-weighted to reflect how consumers shift behavior in response to price changes and is favored by the Federal Reserve for that very reason. It captures not just what things cost, but what people actually do in response. For the Fed, this report complicates the path forward. Inflation is not coming down quickly enough to justify immediate rate cuts, yet the economic engine powered by household consumption is showing signs of wear. The drop in income was driven in part by reduced government transfer payments (especially lower Social Security payouts) but the underlying tone of the data suggests softness beyond that. Private-sector wages still rose 0.4% for a second straight month, which implies the capacity to spend is there. The pullback, then, appears more behavioral than circumstantial: consumers are choosing to hold back. That shift will ripple through supply chains, retail inventories, and pricing dynamics in the months ahead. There’s an old idea that consumers can spend their way out of a slowdown. But in May, they didn’t. With inflation still elevated and household budgets under pressure, the Fed may have no choice but to keep rates steady into the fall. The longer that inflation stays sticky while consumption slips, the more complex the policy tradeoffs become. At Havas Edge, we track PCE not just because understanding what people earn, how they spend, and where they pull back gives us advance warning of demand shifts, pricing sensitivity, and message receptivity. #PCE #fedinflation #useconomy

Spending Falls, Inflation Rises: "Smells Like Stagflation Spirit" May’s spending, income and inflation data from the Bureau of Economic Analysis offered the clearest signs yet of tariffs weighing on the U.S. economy. Consumer spending declined noticeably, following months of front-loaded purchases ahead of expected tariff hikes. Even as demand cooled, inflation continued to edge higher—an early signal of stagflation, the combination of slowing growth and rising prices typically triggered by a supply shock. While inflation has remained within a tolerable range over the past three months, we don’t believe the full effects of tariffs have yet played out. Many businesses have so far absorbed higher input costs by leaning on inventories rather than passing them along to consumers. That buffer may soon erode. We expect increased price volatility over the next three to six months as firms begin restocking at higher, tariff-inflated prices. The Federal Reserve has signaled the possibility of one or two rate cuts this year. But more data will be needed to determine whether inflation pressures are truly under control—or just delayed.

Chanel doubled their bag prices in 7 years and just lost ₹11,000 crores crores in profits. Even the most exclusive brands have limits when it comes to pricing. CHANEL's classic bag went from ₹4.4 lakhs in 2017 to ₹9 lakhs in 2024 (Business of Fashion, PurseBlog). During COVID alone, they raised prices by 76% in just three years (Bloomberg). This led to their revenue dropping 4.3% and profits fell 30% in 2024 with (Chanel 2024 Annual Report): ➜ China, their biggest market, saw sales fall 7.1% (Chanel Earnings Call, 2024) ➜ American customers started walking away (WSJ, June 2024) After working in retail for over two decades, I've watched this revenue drop happen a lot across markets: → Aggressive price hikes during good times  → Customer fatigue sets in gradually → Sales drop when economic pressure hits  → Brands scramble to adjust strategy The interesting part is timing. Chanel paused their usual March price increase this year, as they're waiting to see how US tariffs play out before making moves (Reuters, Feb 2024). The US has imposed 20% duties on EU imports and 31% on Swiss goods, directly hitting luxury brands like Chanel (USTR, Jan 2024). These tariffs add significant costs that brands must either absorb or pass to customers Price increases work when they match value delivery. But when prices climb faster than customers can justify the purchase, even loyal buyers start questioning. The sourcing world sees this clearly. When luxury brands overprice, production orders slow down. Factories in:  📍 India  📍 Bangladesh  📍 Vietnam Feel the impact months before the financial reports come out. In the past, during COVID-19, brands cancelled $3.7 billion worth of orders from Bangladesh factories, with Primark alone cancelling over $300 million (BGMEA, Clean Clothes Campaign). Every brand has a pricing ceiling, even ones with century-old legacies and billionaire customers. Have you ever stopped buying a favorite brand because of the price? #luxury #pricing #business #retail