Depending on who you ask, the USA is either already in a recession, or heading swiftly in that direction. For many, this new crisis is simply an extension of a series of crises that have besieged us all back-to-back dating back to the start of the pandemic, leading to the Collins Dictionary’s word of the year in 2022 being ‘permacrisis’. However, consumers aren’t as spooked as you might think; 66% of consumers say their current financial situation is secure, and more generally, after years of saving and cutting back, many consumers are refusing to continue to live their lives in fear and anxiety. And while consumer confidence in their personal finances is slowly diminishing, no other recession has ever followed a time of such severe restrictions before, so pent-up demand is high, particularly for experiences. In this report, we explore some of the trends that will most impact 2023, as consumers continue to deal with this permacrisis we all seem to be living through. The four trends highlighted in this Direct Hit are:
- Freedonism Reigns Supreme
- “I want it and I want it now!”
- “Gotta collect them all!”
- Show, Not Tell
TREND #1: FREEDONISM REIGNS SUPREME
One positive coming out of the uncertainty of the economy and various states of crisis consumers are living through is that consumers are now seeking experiences above all else. This stems from the fact that consumers are looking to make up for lost time during the pandemic, leading to 45% of consumers saying they plan on living more in the moment than previously. According to EY, out of the five broad spending priorities, experience-first spending has seen the biggest increase since 2020, doubling in size, and is now the biggest priority segment in the USA. More broadly, this comes down to a form of escapism, where consumers are tired of being tired, so they seek fun and engaging experiences. Particularly Gen Z, where 72% of that generation have named fun as their number one value moving forward. However, an important distinction is that this does not mean that consumers are willing to spend on experiences recklessly; despite current financial security, many consumers are still planning on cutting back on overall spending. This means that consumers will be highly selective about which brands and experiences to invest resources into.
TREND #2: “I WANT IT AND I WANT IT NOW!”
While the experience economy is all about delivering immediate and convenient value to consumers, it is not the only realm in which consumers are expecting and seeking swift satisfaction. We are living in a time where assistance tools for consumers are everywhere; the abundance of QR codes to drive consumers to a desired destination, buy now pay later (BNPL) widely available, hybrid shopping and same day shipping features, being able to pay through digital wallets and super apps, even being able to pay at the register simply by tapping your card. As these tools become more widely available, they become more widely used, which is great for a consumer base where impulse control seems to have diminished. This lack of impulse control seems to be particularly strong in younger generations, where 41% of Gen Z and Millennials make an impulse purchase every 2-3 weeks. However, these new tools don’t just impact buying products; as they become more integrated into our daily lives, we expect them to be available no matter what we’re doing. This includes in-person experiences, where these technologies have allowed people to still have the experience they seek, but in a more seamless and integrated way that consumers now expect in all areas of their lives. Expect this to become the new normal, where consumers seek the immediate.
TREND #3: “GOTTA COLLECT THEM ALL!”
Collectibles have picked up momentum with consumers over the last few years, in large part because they facilitate the kinds of experiences consumers are seeking. Collectibles can be either physical items or digital tokens (like NFTs), but with new technologies such as 5G and web 3.0 integrated, they can be so much more than just something to collect. While it is true that above all else, consumers’ motivations for collection stem from a genuine love of the brand, it is also true that collectibles have come a long way from simply collecting coins in hope that they might someday be worth a lot of money. This new generation of collectibles can be traded for experiences, can be kept as an investment to fund future experiences, and can act as membership cards for loyalty programs that continue to provide value over time, regardless of whether they’re physical or digital. They also satisfy both short and long-term outcomes; in the short term, they immediately satisfy the desire to be a part of the ‘in-crowd’ that have a part of the collection, and in the long term, they provide value through investment and extended membership. Expect to see more and more consumers seeking out collectibles to facilitate new bespoke experiences.
TREND #4: SHOW, NOT TELL
While all these trends align with each other, what they preclude is that consumers are more conscientious than ever, and they will not act on these trends with brands that don’t align with their values in the way consumers expect them to. In this age of increased transparency and information availability, there is nowhere for brands to hide behind empty words and gestures. 60% of consumers globally say their default is to distrust a brand until they see evidence to the contrary, and for Gen Z in particular, authenticity is more important to them than any other product or brand attribute. What this means is that consumers will increasingly only interact with brands that follow through on their words with actions, whether that be through legislative support, actively addressing inequality, or active participation in environmental protection. Simply put, brands need to put their money, time, and effort where their mouth is. And what shows that your brand is living up to consumer expectations better than consumer experiences that show not just that you’re saying the right things, but actively doing the right things. The saying “show, not tell” continues to ring true, and should be a guiding philosophy for brands to follow in 2023.
The future is not certain, but it’s a safe bet that these four trends will dominate how consumers interact with brands in 2023. As the economy becomes increasingly uncertain and unstable, consumers will continue to turn to experiences that provide both immediate and long-term value, even as they cut back on product spending more generally. These experiences will continue to be integrated across all the other facets of our lives through the abundant availability of convenience tools at our disposal. Collectibles will continue to evolve into brand loyalty programs and experience facilitators through emerging technology, and how brands continue to act on all these trends and react to society at large will influence how consumers continue to support brands. That’s why we here at RedPeg have identified these trends as trends to watch out for in 2023, and why we believe these trends will help to shape the future of consumer-to-brand relationships.