Dive Brief:
- Despite feeling strapped for cash, U.S. retail spending is up, and mall traffic has increased, according to the Kearney Consumer Institute’s Q3 report, released in August.
- Buying clothes and shoes has emotional value to consumers, who categorize fashion spending differently than brands do, per the report. Clothes and shoes are classified as “apparel” for companies, but designated as “shopping” — a more experiential word — in the customer mindset.
- Consumers make financial decisions based on their total spend rather than individual product prices, and they will “make justifications and trade-offs across the wallet,” according to the report.
Dive Insight:
The report, titled “Money, That’s What I Want, Rethinking the Consumer Wallet,” outlines the challenges of categorization when it comes to consumer spending, and details why the categories and choices within them are complicated.
Four main spending motives are identified in the report. “Essentials,” is defined as something consumers see as necessary or functional; “value” purchases refer to investments in quality or products that work hard and have “potential future value”; “pleasure” shopping is fun, and seen as “retail therapy” or as a reward or a treat; and “expression” buying means a purchase that communicates ego, style, and a person’s values.
Products within each category have different advantages for brands. For example, “consumers are less price-sensitive” to products in the value category, but those products will need to “work hard for the consumer and deliver on quality.” On the other hand, products within the “pleasure” category may hit consumers’ impulse-spending buttons, but may be the easiest for consumers to eliminate. Meanwhile, “expression” products garner the strongest brand loyalty, but are also at risk of being copied or duplicated in the market.
Fashion companies should determine how consumers categorize their brand, and determine risks and motives accordingly, according to the report. The categories companies use are often artificial, and are intended to fit business structure rather than consumer shopping behavior.
However, brands that understand these categories may, in the long term, be able to determine alternate spending patterns and possibilities within similar category motives and predict where spending will shift and how to combat that ahead of time.
