How did uncertainty and inflation affect holiday spending this year? What new opportunities should food and health brands seize in the Ozempic era? And why are we witnessing a resurgence of libraries?
Below we highlight 3 new consumer insights and behaviors that got us talking in January, with actionable recommendations for brands.
Retail revelations: analyzing the 2023 holiday season
The 2023 holiday season kicked off against a backdrop of uncertainty in many parts of the world, with lingering inflation and other financial worries weighing on consumers’ minds, not to mention ongoing news of conflicts and threats around the globe. Nevertheless, preliminary figures suggested that many consumers maintained their spending and provided retailers with some reasons to be cheerful.
The consumer mood in the US in recent months has been characterized by the phenomenon known as vibecession – an ongoing pessimism about their economic circumstances despite many positive economic indicators. According to preliminary insights from Mastercard SpendingPulse, however, overall US retail sales (except automotive) increased by 3.1% year on year between 1 November and 24 December. The last few years were characterized by high year-on-year spending figures due to inflation and frenzied pandemic shopping. But the National Retail Federation pointed out that this year’s increase in holiday spending was more in line with 2011-2019 increases, marking a return to pre-pandemic patterns.
Food, clothing and gift cards were among the top categories where spending increased, while electronics and jewelry reported sagging sales year on year. Eating out was especially popular – restaurants reported a 7.8% increase compared to 2022 spending levels, although some of this could also be attributed to higher menu prices. Online sales saw a 6.3% rise, higher than the 2.2% bump in in-store spending (source: Mastercard).
This year also saw retailers dangling discounts much earlier than anticipated. The Amazon Prime Day sales event was held in October, and Walmart rolled out its Black Friday sales over several weeks. What’s more, because Christmas fell on a Monday in 2023, many procrastinating shoppers crowded into stores to scoop up last-minute holiday gifts and discounts the weekend before. Indeed, $47 billion in sales occurred on the Saturday before Christmas (“Super Saturday”), making it the biggest shopping day of the season. Black Friday was a close second.
In the UK, as shoppers turned to grocery discounters to alleviate financial pressures felt due to the cost-of-living crisis, discount supermarket chains Aldi and Lidl reported record-high sales this Christmas. Lidl’s sales rose 12% in the weeks leading up to Christmas, and Aldi’s sales rose by 8%. This increase coincided with a growing preference for private-label products. Sales of Lidl’s own-brand Christmas sweater grew by 40%, making it one of the store’s most popular products. Both Lidl and Aldi reported their busiest day ever on Friday 22 December.
Another major event to define the holiday season is Singles Day. Held in China around 11 November, the premier shopping event wrapped up this year with record reported year-on-year growth. However, the event’s founding brand, Alibaba, declined to release official sales figures (as it did in 2022), suggesting a subdued performance. JD.com, another major participant in the event, said its sales reached “new highs” this year but also refrained from sharing official figures. China’s economic downturn and sluggish recovery have prompted consumers to prioritize necessities and essential purchases. The enticing offers failed to sway most consumers, with many expressing the feeling that the deals didn’t live up to the standards set by past promotions.
See beyond
– Despite a resurgence in spending, many consumers are exhibiting a growing inclination towards seeking discounts, availing themselves of deals and favoring private label brands. This underscores the importance of Maximizing Value in consumer decision-making. With low growth and persistently high interest rates predicted for many markets in 2024, this cautious outlook is likely to remain.
– The pursuit of discounts and deals doesn’t merely signify a desire for cost savings but represents an evolving mindset where consumers seek a balance between affordability and quality. Brands that can consistently provide competitive pricing, exclusive deals and a range of products under their private labels stand a better chance of retaining consumer attention and loyalty. This encompasses transparent and consistent pricing strategies, well-crafted promotions and the cultivation of a robust portfolio of private label products that align with consumer preferences.
Brands adapt to changing consumer needs in the Ozempic era
The journal Science named GLP-1 drugs such as Ozempic, Wegovy and the recently approved Zepbound, the Breakthrough of the Year for 2023 due to how they are “reshaping medicine, popular culture, and even global stock markets”.
More evidence – both anecdotal and quantified – is emerging about other potential benefits of the drugs beyond weight loss – for example, their impact on reducing the risk of heart attacks. One eye-catching suggestion is that the drugs may help with managing addictions, such as those relating to alcohol, gambling and compulsive shopping.
Scientists have explained, however, that this is not surprising since GLP-1 drugs have been found to reduce the release of dopamine in the brain when people consume alcohol, in the same way they do when people eat fatty or sweet foods. Dopamine release motivates people to continue eating or drinking (or repeating other addictive behaviors), so when it is suppressed, people are less likely to have certain cravings or continue or repeat those behaviors. This is one reason why users of GLP-1s may be reporting reduced consumption of high-fat and high-sugar foods, as well as increased feelings of fullness after eating. It could also explain reduced alcohol cravings.
See beyond
– While clinical trials are still required to confirm the findings, they could have important implications for addiction management, along with much wider ramifications. The dopamine suppression response that GLP-1s seemingly induce could help consumers effortlessly practice Moderation Mantra in multiple areas of life, leading this trend to become completely mainstream.
– It’s notable that companies such as Kraft Heinz and PepsiCo saw their share prices fall following some of the early results of the drugs being made public, and there are already signals that the food industry is taking steps to adapt to the potential impacts of weight loss drugs on consumers’ diets. For example, General Mills has confirmed it’s developing a protein-based product, which could offset the loss of muscle mass that has been experienced users of the drugs. Other potential opportunities could be to create smaller formats and less calorie-dense offerings, or to offer complementary supplements for users since it may be harder to reach recommended nutrient levels when consuming fewer calories.
– There is less evidence that the alcohol industry is making changes as a result of the emergence of these drugs, and some reports point to higher alcohol consumption in GLP-1 users, especially those who are not obese. However, there is an ongoing shift to the production of no- and low-alcohol offerings, which are generally lower calorie than their alcohol-containing counterparts. Accelerating the development of more health-conscious products could prove to be a wise move. Similarly, we expect some consumers who are drinking less to focus on quality over quantity when choosing alcoholic drinks – a shift already being partially met by the craft trend across many alcohol categories. This may lead to more opportunities for premiumization.
– There are also predictions that weight loss drugs could boost gyms and the fitness industry. While some may have expected reduced demand for workouts in the face of an alternative that requires no strenuous effort, indications suggest users of the drugs are increasing their engagement with exercise. Gym chain Life Time has confirmed it is planning to prescribe GLP-1s for members, delivered by in-house healthcare professionals alongside trainers and nutritionists who will provide additional exercise and diet support. Meanwhile, Equinox has tasked its trainers with developing fitness regimes that support users of GLP-1s, helping them to maintain muscle mass as they lose weight and keep weight off after stopping taking the drugs.
Libraries and reading bring people together
Many set goals for reading when the new year rolls around. 7.6 million readers participated in the 2023 reading challenge on Goodreads, for instance. At the start of 2024, reading and libraries are proving popular for a number of reasons.
According to research conducted for the American Library Association, a majority of Gen Z and Millennials in the US have visited a physical library in the past year. What’s more, 23% of Gen Z and Millennials have visited a physical library but do not identify as readers. Researchers talked to young visitors at public libraries and found that they were “coming to the library just to ‘vibe’ and hang out”, doing things like crafting, chatting, gaming and checking their phones.
Library environments and events can appeal to younger consumers especially, since they are more likely to be feeling lonely: 40% of global Gen Z feel at risk of loneliness over the next five years, compared with 28% of Millennials and 23% of both Gen X and Boomers (source: Foresight Factory, 2023). Outside of the library, book-reading parties are also proving popular as ways to meet people through reading. It’s also worth pointing out that younger generations are still interested in reading more generally. Videos tagged with #BookTok have more than 210 billion views on TikTok at the time of writing. For more on who reads for pleasure and how to connect with readers, check out this piece.
Libraries are a welcoming space not just to spend leisure time but to get work done. Year-on-year, a consistent percentage of consumers say they expect to work from home more than they did pre-COVID – the figure stands at 28% of global consumers (source: Foresight Factory, 2023). Besides providing resources for jobseekers, libraries provide a change of scenery and a quiet respite from the home – many have bookable private meeting rooms – at the same time giving workers a chance to be around others without having to interact with them much. Cafés provide this too, but libraries are free – though, for those who want to stay caffeinated, more branches now have cafés under their roof as well.
See beyond
– The link between positive relationships and wellbeing is clear, and one contributing factor to Social Wellness is having somewhere besides the home or workplace to spend time with others. While some consumers use game worlds as third spaces, hanging out together on Roblox, for instance, in-person experiences still hold appeal, and libraries are well placed to act as third places. They’re often local, offer many resources and programming, and are freely available to the public.
– The resurgence of libraries may be due to their versatility. This underlines the importance to consumers of Multi-use Spaces that can fulfill a variety of different roles. This is particularly relevant in the era of hybrid working and changing social geographies.
