In recent years, consumer spending has seen a dramatic reduction, and understandably so. Across the globe, countries are dealing with the fallout from the pandemic and other societal factors that have impacted their economies.
Many consumers are tightening their purse strings in response to a cost of living crisis where they live, and so retailers are facing the challenge of how to increase revenue in the face of this current reality.
Fortunately, there is hope on the horizon, and it comes alongside a series of technological advancements and tools that support increasing retail sales even in tough economies.
Why is Consumer Spending Down?
Around 6 in 10 adults in the UK spend less on non-essentials due to increases in the cost of living. It’s impossible to ignore that consumer spending has experienced a sharp decline over the past few years, but what are the main factors behind this downward trend?
(Image Source: ONS)
While it seems like the world has recovered from the COVID-19 pandemic, the latent effects of its devastating impact on the global economy still remain. Many working professionals are still getting back on their feet, businesses are still reeling, and there’s perhaps a general hesitance to overspend at what feels like an unpredictable time.
Combine this with the constant chatter in the news of recessions and cost of living crises, and you have a recipe for low consumer spending. The reticence to spend on non-essential products is at an all-time high for the past 5 years, even if things are slowly starting to improve.
How you can use Technology for Retail Growth
If you work in retail, you’re likely concerned about what the decline in consumer spending means for your business in the coming years.
However, this doesn’t have to be the case. As always, there’s opportunity in every situation, and now, more than ever is a time to capitalise on the uncertainty and invest in the technology that can help you grow your business in spite of economic conditions.
AI solutions for customer relevance
In 2024 and beyond, one of the best ways to hook customers’ attention and encourage action is to create relevance. When your brand and products are relevant to the customers you’re trying to reach, you tap into key psychological triggers necessary to make a purchase.
By using AI in your workflows, such as a percentage increase calculator, you can offer personalised recommendations at the perfect moment. Personalisation at scale has proven to deliver a 1 to 2 percent increase in total sales for grocery companies and more for other retailers.
For example, you can suggest that existing customers buy another bulk bag of coffee at the start of the month, as you know when they historically stock up for the month. Or you can use seasonal context to push products that might make great gifts based on what you know about your customers.
(Image Source: Accenture)
A study by Epsilon showed that 80% of customers are more likely to buy from a business that offers personalised experiences.
E-commerce Options to Streamline the Ordering Process
If it’s truly the case that many consumers are spending less money on non-essentials, then it’s in your best interests to set up an e-commerce store to capitalise on this information.
For many consumers, making purchases online from the comfort of their homes is the only way they like to shop these days. This may well be a reinforced habit from the pandemic when it really was the only way to shop.
With an e-commerce store, you can offer consumers a convenient way to buy from you, but what’s more, you can build a loyal customer base with email marketing, pushing sales, loyalty schemes, and discounts in emails you send out to your growing list. As an example, if you sell furniture, offering a customer a personalized recommendation to purchase a new sofa could significantly increase your sales volume during promotions.
Omni-channel Sales to Create a Unified Experience
Building on the inclusion of an e-commerce store is the idea of an omnichannel retailer strategy.
What this means is creating a holistic shopping experience for customers whereby everything is seamlessly integrated.
For example, making a purchase in store using EPOS registers with your CRM (customer relationship management) software and informs your loyalty scheme triggering an automated email to the customer – all of which happens in a matter of seconds.
An omnichannel strategy allows you to interact with customers at multiple touchpoints and stay in front of their minds for the next time they go shopping.
Omnichannel strategies tend to drive an 80% higher rate of incremental store visits, according to Think With Google insights.
