Consumer Spending Indicators
Why is consumer spending of vital importance
Should a business be interested in learning the consumer spending habits? Any economics expert will tell you that learning what drives consumer spending can help the business improve on its services and hence its sales. However, consumer spending habits tend to change with time. It's dynamic, and businesses should constantly strive to learn consumer behaviors at all times. Here are some indicators that will show you that currently there is a shift in the consumer spending patterns on clothing
Buying based on self-identity and social image
In today's society, self-identity and social image are considered critical in defining beauty standards. Consumers tend to show high interest in fashion and dressing up so as to define their identities. The choice of fashion is decided based on skin color, hair length, and color, height, most of which can be attributed to the standards defined by society over time. Consumers believe that clothing mirrors their self as well as social identity, their beliefs, and values. Fashion trends are generally driven by social factors and demographics. Mostly young generation resonates with particular social groups and follows the trends set by these groups in creating an identity for themselves. They are of the view that the clothes they buy talk a lot about themselves and their opinions. Consumers also tend to buy clothes not for their quality but as per the seasonal trends. Nowadays, consumers believe in fast fashion and like to change their fashion outfits on a quicker basis.
On the online shopping front, customers preferred these because of the convenience offered of purchasing easily through mobile. In 2018, the online clothing market in the United Kingdom had a share of 24 % of the entire clothing sales (The Telegraph, 2019). Also, discounts given on e-commerce were big drivers in influencing purchasing decisions through these online platforms. However, websites providing hassle-free delivery like Amazon, and those provide good details on the product like closer looks, appropriate colors, better user interface were preferred by consumers while buying online. Thus fashion retailers providing an integrated experience to consumers are a winner in the e-commerce segment. Consumers use online shopping platforms, which provide an integrated experience, including that of offline. Many also indulge via buying online and in-store pick up for clothing. They also get easily influenced through online shopping owing to the huge discounts offered, the range of brands available at one platform as well as much more information than offline shops.
Fig 2: online vs. Offline Market share in the UK
The clothing market in the United Kingdom is undergoing phenomenal change with the advent of online shopping platforms. These platforms are garnering a high share of consumer spending and impacting what consumers choose to buy, be it online or offline shops. They are adapting quickly to the changing customer demands rather than offline platforms and hence are gaining an edge.
The key factors that affect consumer spending
Upon some analysis and consultation with the best financial economics assignment helpers on our platform, we came up with the factors that influence the consumer decision in buying clothes. Remember that consumer consumption habits are one of the factors that affect the demand for a good. As this section will unravel, understanding consumer spending gives us more insights other than their spending patterns. Established and renowned enterprises have found ways to use consumer consumption to help multiply their own profits. These points that we have listed here will help you use them to your own unique advantage.
Micro factors play the most critical role in buying decisions. These include the individual's age, gender, profession, income level, education, innate personality, attitude, etc. Consumers these days want brand names since these provide them with a sense of status and social meaning. They look for fashion statements with the aim of having a unique identity and to depict what they want to be perceived as among their friends, colleagues, or other reference groups. Buying branded clothes are decisions motivated by consumer's needs to gain popularity, attention and hence are preferred over normal clothes that fulfill basic necessities.
Culture and values
Culture and values are taught to shape the thinking in individuals and their choices. Consumers belonging to different social classes have different views and choices with regards to fashion and brands. However, social media recently has a huge impact on consumer decisions and reduced the role of culture, but still, culture holds a strong role in influencing buying decisions. Millennials are more prone to get affected by social media than other age groups.
Cognitive thinking by the consumer, their knowledge, how they perceive certain brands, emotional thoughts that provide positive or negative influence while buying, their inclination towards the brand all come into play while buying clothes. These days consumers tend to indulge in clothes shopping if they had a bad day or just to boost their spirits up. Shopping is seen as a way of relaxation and amusement as well.
Consumer behavior includes not only a complicated mental process but also physical activity (purchase decision). The physical and mental activity encompasses a pre-purchase and a purchase and consumption stage. The pre-purchase stage has three steps viz. 1) recognition desires, 2) information and 3) evaluation of pre-purchase alternatives. The need recognition is the desire to buy a product owing to actual need or a desire gained due to environmental or social factors, which leads to the second stage to look for information. After looking for the information, the available options are evaluated based on reviews or availability. Preferences or predetermined mind while actual purchase also influences the purchase the most.
Consumer attitudes on buying
The consumers' attitude towards the fashion sector can be explained by two motivational factors (Ramkumar & Woo, 2018). The utilitarian motivation in which the purchase is made as a solution to the need. It is a convenient method and saves time and is reasonable. The other motivational factor is the hedonist factor in which the purchase is made mostly for adventure, enjoyment, just for the sake of trying, etc.
Consumers continually analyze what they see, whether it be festive wear or beachwear. This analysis varies according to the perception from consumer to consumer. The perception varies according to age group, gender, and social background. Sometimes, what might seem to be a bit irrational fashion to an individual might seem to be pleasing to another group. The discussions of a social group of consumers might be able to influence the perception of consumers leading to purchase a few times (Bhardwaj & Fairhurst, 2009).
Personality tends to affect the consumption practices a lot. Consumers usually tend to choose fashion apparel that goes with their personality. The existing personality may be a result of upbringing or friends circle or society consumer lives in. A particular fashion or a model or a style may be very much appreciated in one class of society, whereas it might be revered the same in other classes. Say some fashion doesn't woo the United Kingdom consumers. It is very unlikely that such fashion apparel will notice a sale as high as some fashion that caters to the United Kingdom consumers.
Literature studies on the factors that affect consumer spending
In our endeavors to understand what affects consumer expenditure, we had to look at the different research studies that have been conducted by economic gurus on the topic. All of them tend to agree that there are many factors that affect consumer spending. There is research that was of interest to us, which would fortify the points that we have stated above.
The study points out that there are five major factors that influence the consumer's attitude toward buying fashion products (Ramkumar & Woo, 2018). The five constituent factors are materialism, brand consciousness, fashion innovativeness, social comparison, and fashion involvement. Brand consciousness reflects the consumers' tendency to opt for highly advertised brands. Materialism points towards a class of customers who are attached to the product in terms of happiness and success. Social comparison is when the social group consumers live in shape their shopping attitude. Fashion innovativeness is the need of consumers to look different in the crowd or to adapt to a new fashion before the general crowd. Fashion involvement is a bit related to the likes and dislikes of consumers. All these factors combined work to have an effect on the purchase intent of consumers.
How to cope with the dynamic nature of consumer behaviors
The dynamic nature of consumer spending stems from the fact that we humans are dynamic. We change with the environment and are adept at changing with any circumstances. In the process, our demands change, leading to a change in consumer spending patterns. Businesses have to cope with these patterns too. So what can they do in this regard?
With an increase in the number of brands and shops, fashion retail is very dynamic and highly competitive (Newman & Foxall, 2003). These dynamics indicate that the market is very liquid, and the preferences and choices of consumers are constantly changing. The brand value increases by gaining popularity, which is achieved by constantly showing improvement and ceasing to differentiate themselves from the competitors. It is very crucial to maintain improved brand value by carefully engineering brand loyalty. Engineering brand loyalty means analyzing the macro and micro factors that influence consumer behavior and strive to develop the brand image. It includes a number of small steps undertaken through a number of different channels (King 1978).
For advertising, the conventional funnel model can be followed, which has a few simple steps to ensure proper advertising (Blue Corona, 2019). The funnel model is basically a loop that starts from the first step, i.e., the first purchase, and goes on till ensuring the consumers to purchase again. The first step is the 'Awareness' step, which aims at creating a brand name among the target audience. The next step is the 'Interest' step. Once awareness is created, it is very important to keep the customers engaged. The next step is the 'desire' step. It is about edging over the competitors to convince the customers that your brand is the best and the most reliable place to buy the product. This step is not directly related to the customers but works backstage to enhance their interest. The final step is the 'Action' step. It is more aligned towards bringing the first three steps into action. The people who have already bought products once should be encouraged to come back again.
As mentioned by Byron Sharp in his book, marketers should not focus on building deep relationships with consumers (Sharp, 2016). Instead, they should work on creating the shopping experience for consumers as easily as possible, be it through the online platform or offline stores. They should work on creating fast-fashion, quicker availability of products, and changing styles as the consumers prefer this nowadays. Sharp is also of the opinion that marketers should not indulge in target marketing but work on mass marketing with a universal message since it bores more guaranteed results. Brands should focus on constantly reaching out to consumers through all platforms, especially social media since consumers these days are very much addicted to smartphones.