At a time when consumer shopping behavior is being watched closely in the face of economic uncertainty and inflation, the Kearney Consumer Institute has released its first 2023 briefing on gifting titled “Should I Stay or Should I Go? Redefining Trading Down, Trading Off and Consumer Shopping Decisions.”
The KCI briefing advises deeper consideration about why people are switching, and how that relates to product attributes and perceived quality.
KCI found 64% of consumers still buy the same goods and services they did six months ago despite the inflationary economy. Although aware of rising prices, most shoppers are searching for the choice that best suits them and, as a result, have increased purchases of both luxury and value options. A continuous proliferation of branded products that have created a broad range of quality shopping options at a variety of price points has given consumers a greater range of available choices, allowing them more room to decide what constitutes as a value on any given shopping trip.
As such, consumers don’t see themselves trading down as much as trading off. Asked about the proportion of times they felt like they were upgrading, downgrading or trading off when making shopping choices regarding different products or even reducing or eliminating purchasing in a category they’ve previously tapped, 66% of respondents viewed their decisions as neutral or an upgrade, and dismissed the notion of trading down.
The idea that shifts in buying decisions are shoppers trading down oversimplifies and judges consumer behavior in an inherently negative light, according to KCI. It suggests that consumers are getting less, forgoing quality, or are stuck without other options. KCI research indicates that consumer perceptions of the considering quality depends on how they view offsetting benefits. When asked how they thought about cooking a nice meal at home versus going out to eat, 30% of respondents said they saw that as trading up, 49% saw it as a trade off and only 21% saw it as trading down. Then, almost 70% of respondents participating in the KCI research reported reducing their spend in one category to spend in another.
“Making adjustments to their spending patterns is not a trend for consumers, it’s speaking to a longer-term reality,” said report author Katie Thomas, who leads KCI. “The concept of trading down can best be explained as the convergence of quality and optionality, loyalty and brand switching. Trading down is an inherently negative concept, implying a cheaper product or lower quality. But it can also mean willingly buying less, cutting back on or eliminating products or categories, intentionally shopping at discount retailers, reducing spend in other parts of the wallet. Retailers and brands need to take a less judgmental look at what consumers are experiencing.”
