The 5WPR 2023 Consumer Culture Report finds that shoppers are shrugging off inflation. Censuswide surveyed 2,000 US consumers for 5WPR between November 21 and 24, 2022. Consumers expect inflation to affect them for 1.64 years on average, yet 60% are still willing to spend on goods and services beyond necessities. Two thirds (66%) would switch from a trusted brand to a value-based alternative. Brands that assume shoppers are frozen, or loyal, misread both the appetite and the risk.
This is the fourth annual edition of the report. The full 2023 Consumer Culture Report PDF covers inflation sentiment, splurge and save categories, disposable income, buy now pay later, brand loyalty and the influences behind indulgence. The findings below come from that report unless another source is named.
How worried are consumers about inflation in 2023?
Consumers expect inflation to affect their spending for 1.64 years on average, about one year and eight months, according to the 5WPR 2023 Consumer Culture Report. Only 5% think the effect will last longer than two years, and 14% expect no effect at all. Consumers aged 45 and over expect two years of pressure, while most 16 to 44 year olds expect about one year.
Media conversation matched the mood. 5W's research and analytics practice analyzed more than 2,000 articles from November 2021 to November 2022 with natural language processing. Conversations about rising costs and consumer spending were neutral 47% of the time and positive 37% of the time. Dara A. Busch, Co-CEO of 5WPR, said in the March 2, 2023 press release announcing the report that "inflation is not the predominant factor driving consumer decision-making."
Where will consumers splurge and save in 2023?
Consumers plan to save more than they splurge in every category except electronics and technology, according to the 5WPR 2023 Consumer Culture Report. In that category 51% will splurge and 49% will save, making it the top splurge for the third year running. Health and wellness (43%), home goods and furniture (42%) and dining out (40%) follow, all down from 2022.
| Rank | 2023 | 2022 | 2021 |
|---|---|---|---|
| 1 | Electronics and technology (51%) | Electronics and technology (57%) | Electronics and technology (54%) |
| 2 | Health and wellness (43%) | Health and wellness (49%) | Travel and experiences (46%) |
| 3 | Home goods and furniture (42%) | Home goods and furniture (48%) | Dining out (41%) |
| 4 | Dining out (40%) | Dining out (46%) | Home goods and furniture (41%) |
Age changes the order. Every age group except 35 to 44 ranks health and wellness in its top three, and 25 to 34 year olds are the only group with dining out in their top three. Consumers 55 and over put home goods and furniture first, ahead of electronics.
| Rank | 16 to 24 | 25 to 34 | 35 to 44 | 45 to 54 | 55+ |
|---|---|---|---|---|---|
| Splurge 1 | Electronics and technology | Electronics and technology | Electronics and technology | Electronics and technology | Home goods and furniture |
| Splurge 2 | Health and wellness | Dining out | Beauty and personal care | Home goods and furniture | Electronics and technology |
| Splurge 3 | Clothing and fashion | Health and wellness | Clothing and fashion | Health and wellness | Health and wellness |
How did consumers spend their disposable income?
Dining out took the largest share of disposable income in 2022 at 42%, up from 37% in 2021, according to the 5WPR 2023 Consumer Culture Report. Clothing and fashion followed at 35%, electronics and technology at 29% and beauty and personal care at 20%. Electronics was the top splurge but not the top spend.
The youngest consumers spent differently. Consumers aged 16 to 24 spent most on clothing and fashion (46%), the only group to rank it first, and spent more on beauty and personal care (30%) than on electronics. For 2023, clothing and fashion ties with dining out as the top intended category overall at 29%, up from 27%.
| Category | Overall | 16 to 24 | 25 to 34 | 35 to 44 | 45 to 54 | 55+ |
|---|---|---|---|---|---|---|
| Clothing and fashion | 29% | 38% | 38% | 35% | 29% | 19% |
| Dining out | 29% | 26% | 33% | 28% | 30% | 28% |
| Travel and experiences | 25% | 17% | 26% | 29% | 31% | 25% |
| Electronics and technology | 23% | 24% | 33% | 32% | 27% | 11% |
| Health and wellness | 22% | 28% | 22% | 18% | 22% | 22% |
Buy now pay later has become routine. In the report, 60% of consumers use installment options while shopping, and 80% of those users are aged 25 to 34. Over half of users say installment options affect how they spend, but only 11% say the effect is large. Users are most interested in spending on clothing and fashion in 2023.
How loyal are consumers to the brands they trust?
Two thirds of consumers (66%) would likely switch away from a brand they know and trust for a value-based alternative, according to the 5WPR 2023 Consumer Culture Report. Of those, 28% are very likely to switch, and consumers aged 35 to 44 are the most fickle at 34%. Just one in seven say they would be unlikely to swap.
Consumers name specific ways retailers can help them save. Product discounts lead at 50%, followed by waived shipping fees (38%), value-based alternatives (30%) and easier returns (17%). Almost a quarter (24%) name no particular way. Three in ten consumers say no same-day shipping fee is justifiable, and 40% say it should cost no more than $10. The average consumers will pay for same-day shipping fell to $6.64 from $6.78 in 2022.
| Rank | Way retailers can help consumers save | Share of consumers |
|---|---|---|
| 1 | Give product discounts | 50% |
| 2 | Waive shipping fees | 38% |
| 3 | Offer value-based alternatives | 30% |
| 4 | No particular way | 24% |
| 5 | Make returns easier | 17% |
Busch said in the press release that modern consumers "have limits when it comes to brand loyalty." The report argues the experience of buying a product now matters as much as the product itself in keeping a customer.
What persuades consumers to splurge?
Word of mouth is the most influential factor in persuading consumers to splurge, according to the 5WPR 2023 Consumer Culture Report. It is cited by 3 in 10 consumers overall and 4 in 10 aged 25 to 35. Paid ads in social feeds rank second, influencing 1 in 4 shoppers under 34. An influencer's post on Instagram or TikTok ranks third across all ages.
Half of consumers say no factor can convince them to splurge. The split falls by age: consumers 34 and under are about 10 points more likely to name a channel than consumers 35 and over. Under 44s rate paid social ads and influencer posts almost equally. The report notes the 2021 edition found consumers aged 16 to 34 already learned about new products first from social media, then word of mouth.
The report closes this section with a question for marketers: what does word of mouth mean today? Older consumers may hear a friend's recommendation or read a review. The youngest may count a micro-influencer's TikTok as word of mouth. Marketers who answer that question for their own audience know which channel to feed.
What should brands do with the 2023 findings?
Brands should act on buying intent, feed word of mouth, and treat customer experience as part of the product, according to the 5WPR 2023 Consumer Culture Report. The report closes with five actions. The table below pairs each with the finding behind it.
| Recommendation | Finding it answers | Action for brands |
|---|---|---|
| Buying decisions made fast | 60% will spend beyond necessities; 80% already know their top categories | Be present when intent forms, because the purchase follows |
| Word of mouth equals rising sales | 3 in 10 are persuaded to splurge by word of mouth | Deliver the expected experience so customers pass the brand along |
| Influence of social media | 1 in 4 under 34s splurge after a paid social ad | Reach younger shoppers with paid and influencer posts in feed |
| Brand loyalty could be waning | 66% would switch for a value-based alternative | Give trusted customers a reason to stay before price pulls them away |
| Customer experience is the product | Waived shipping (38%) and easier returns (17%) drive savings | Use free shipping and easy returns to turn one-time buyers into loyalists |
How was the 2023 Consumer Culture Report researched?
The 2023 Consumer Culture Report is based on a survey of 2,000 US consumers by Censuswide, an independent market research consultancy. Fieldwork ran between November 21 and 24, 2022, with a nationally representative sample. Censuswide is a member of the British Polling Council and employs members of the Market Research Society. All survey panelists are double opted-in, in line with the Market Research Society code of conduct and ESOMAR standards. 5W's in-house research practice paired the survey with an AI-based analysis of media conversations from November 2021 to November 2022.
The full report includes every age breakdown covered above. Download the 2023 Consumer Culture Report as a PDF. Other editions and 5W studies are collected on the 5W research hub.
CONCLUSION
The 2023 Consumer Culture Report shows a shopper who will keep spending through inflation, listens to friends over ads, and will leave a trusted brand the moment a better value appears. Brands that earn word of mouth and remove friction from shipping and returns keep those shoppers. 5W's consumer PR practice builds those programs for retail, fashion, beauty, wellness, dining and consumer technology brands. Get in touch at info@5wpr.com to brainstorm how these findings apply to your brand.
