Markets And Consumers Are In Chaos Mode

We’ve had a little time to chew on the sweeping tariff plans of “Liberation Day,” and if the markets are any indicator, it’s been tough to digest. The free-falling stock indices and the (even more than usual) crush of humanity at Costco with their carts piled high are all signs of skittish consumers and, by extension, worried businesses. Ergo, out of the blue, we teeter on the edge of a bear market.

These tariffs are going to take a bite out of consumers’ household income — and the lower the income, the bigger the chunk (hence, tariffs work as a regressive tax). In response to this income hit and the continued fog of uncertainty about their future earnings, consumers have already begun to take several steps to manage the implications for their pocketbooks.

Five Consumer Behaviors

Here are five buying behaviors to look out for among your customers:

  1. Pantry-loading: People are stocking up because they know prices will rise. This is somewhat futile, however, as it’s not entirely clear which categories will be hit hardest (at least, the average consumer does not have the means to figure that out). More importantly, there isn’t a pantry large enough to accommodate years’ worth of trade policy chaos.
  2. Downscaling: People are purchasing less, completely skipping larger-ticket items, and opting for cheaper brands, including private labels.
  3. Promotion-hunting: Consumers are responding more eagerly to promotions, purchasing items on sale, and making real-time brand switches based on offers (such as digital deals on the grocery store app while pushing the cart down the tortilla chips aisle).
  4. Channel-shifting: Shoppers are flocking to purchase from less expensive retailers such as dollar stores, as well as from warehouse stores where buying in bulk is associated with better value (hence, the aforementioned crush of humanity at Costco).
  5. Self-servicing: Savvy consumers are relying on DIY, repairing things, and growing their vegetables (I kid you not: Numerous consumers told us this in our qualitative research!).

What You Can Do To Manage The Chaos

How should you react to this behavior and prepare your business and your brand?

  • First, do the homework on your customer segments. Apply a financial resilience filter before you react in haste, because not every person and category will experience the economic effects in the same way, and a shotgun approach to giving away margins will unnecessarily deplete profits. Look before you leap — chances are that you will have to leap, but at least you will be going in the right direction.
  • Look at any tactics through a growth framework. Use our five-lever approach — salience, product, price, experience, and access — to plan your strategy. This may take you down the road of initiatives such as shifting media dollars, changing products or pack architecture, or even providing new digital experiences with timely and relevant promotions.
  • To better manage your brand and business through this period of uncertainty and shifting consumer behaviors, please read our report, Consumer Marketing, CX, And Digital Leaders: How To Thrive Through Volatility (US).
  • If you are a Forrester client, stay tuned for additional research on how CMOs can better manage uncertainty and volatility. Go to my Forrester bio and click “Follow” to be notified.
  • Also, as a client, you can schedule time with me for an inquiry or guidance session, or talk to your account team about workshops and strategy days on planning through uncertainty.