Commerce Feed: Issue No. 19 – August 2022

Consumer Spending Strained

Spending is down in the US for household items like furniture and electronics, as food, gasoline and other essentials have become more expensive. Retailers including Walmart and Best Buy are expecting to feel the pinch.

DCA Insight:

The change in spending habits is uneven. Many people are dining out and traveling more after not being able to during the height of the pandemic. And high-income individuals continue to purchase items they desire. But for the rank and file, sentiment about the economy appears pessimistic.

Open Questions for Leaders:

1. Should loyalty programs innovate to preserve middle-income consumer spending on durables, or shift to focus on essentials?
2. Will high-income consumers eventually respond to continued inflation, and if so, how can digital marketing and loyalty programs get ahead of that shift?
3. What data might provide leading indicators for the next shift, since consumer sentiment and behavior seem poised to keep changing?

Related DCA Resource:

Commerce Code Ep. 123: The Economy & The Consumer – On this episode of Commerce Code, Dan Currell explores consumer behavior in the current, volatile economy with Tim Lee of Full Stack Economics.  Full Stack Economics is an independent publication based in Washington, D.C.

Demand for Luxury Goods Soars

Name-brand handbags and jewelry are selling fast. Many lux brands have more than doubled their sales in the U.S. since the pandemic began.

DCA Insight:

Wealthy consumers are of course more immune to challenges facing most shoppers. Walmart reports consumers have pared back on buying clothes, and Amazon has indicated a recent e-commerce slow down. Look for the dichotomy to continue in our new-normal marketplace.

Open Questions for Leaders:

1. How can luxury goods merchants navigate the difficult distribution landscape of 2022?
2. Will high-income consumers eventually respond to continued inflation, and if so, how can digital marketing and loyalty programs get ahead of that shift?
3. 2021 saw a Holiday spending season that mirrored 2019. What will the 2022 shopping season look like?

Related DCA Resource:

Commerce Code Ep. 91: Loyalty Programs & The 2021 Holiday Shopper – On this episode of Commerce Code, we dig deeper into the 2021 holiday luxury shopper and the performance of loyalty programs paired with luxury products with James Berry, Commercial Director, Valuedynamx.

Data Security Key to Consumer Trust

Digital banking tools increasingly rely on advanced security techniques to earn consumers’ trust, a PYMNTS’ research report recently revealed. Biometrics and password-less logins lead the list of consumer preferences.

DCA Insight:

The pandemic has spurred reliance on digital making tools. Fewer customers are using branches, and more count on mobile apps. Most consumers now connect with their accounts digitally. Consumers increasingly are looking for and value information about how their transaction are secured, as this research confirms.

Open Questions for Leaders:

1. How can digital-only FI’s raise awareness of digital security and thus, have consumer trust in digital banking?
2. What are some ways that AI Fraud Detection can improve in the mobile wallet space?
3. What are some aspects of banking that currently require a branch or in-person experience, and should / can those go digital-only?

Related DCA Resource:

Commerce Code Episode 114: Considering the Future of Financial Data: In this episode of Commerce Code, Dan Currell, CEO Digital Commerce Alliance, reflects on key points from DCA’s Financial Data Forum where industry executives discussed best practices in financial data and the future of data security.

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