For 2022, one of the greatest concerns Americans are facing could be how record inflation will continue to increase household expenses and eat into wages. The 7 percent increase in the inflation rate over the course of 2021 marked the largest in nearly four decades. Americans saw prices for the basic necessities rise at a dramatic rate in 2021.
While the government’s efforts to provide stimulus aid and ultra-low interest rates motivated Americans to spend, supply chain woes resulted in such high demand for goods that prices increased at a record pace. Earlier this month, the U.S. Department of Labor reported that the core inflation rate, which excludes volatile goods such as food and gas, jumped by 5.5 percent in December, the highest in decades.
Yet, U.S. shoppers are continuing to spend – and social media continues to be a major factor on where Americans are taking their business. According to a new survey conducted by Point and OnePoll, more than one in three respondents said they considered social media “very influential” when it comes to their spending habits – with 35 percent of respondents reporting as much, compared to just 12 percent who said social media is “very uninfluential.”
The survey also found that more than half Americans – 55 percent – even said that social media had influenced them to go over budget or otherwise spend more money than intended on a particular product. One factor cited was the pressure to “keep up with the Joneses,” with 35 percent of respondents agreeing.
It Was The Pandemic
Social media’s influence in getting Americans was also amplified by the pandemic. During the lockdowns, and calls to scale back gatherings, Americans actually cut back on spending. However, in 2021 as the country began to settle into the new normal, spending increased – even as the supply chain issues persisted.
“The pandemic changed and continues to evolve consumer shopping habits,” explained Mary Schneeberger, senior director of the integrated marketing practice at Avionos, which has also tracked American spending habits in 2021. “Between online, in-person and hybrid shopping, the past two years have proved that retailers will do anything to adapt to their consumers’ needs and demands for a seamless shopping experience. In the age of influencers, virtual reality try-ons and live streams, purchasing products through social media is on the rise and is further changing the future of shopping habits.”
Social media hasn’t just changed the way consumers transact, but also the way they discover new brands and products.
“Social influencers have earned consumers’ trust by showcasing their purchases, discussing the quality of the product and giving their opinions to thousands of people on platforms like YouTube, TikTok and Instagram in an entertaining format. Customers are using other customer ratings and reviews to make final purchasing decisions vs. relying solely on brand-published content,” said Schneeberger via an email.
The Younger Crowd
Not surprisingly, the Avionos study also found that it has been mostly younger generations who use social media in their shopping decisions.
“Gen Zers (70 percent) and Millennials (68 percent) used social media to purchase and interact with brands more than Gen X (51 percent) and Baby Boomers (33 percent) since these younger users leverage multiple channels to buy products compared to older generations,” added Schneeberger.
Gen Zers were also found to spend more time on social media compared to their older counterparts, which further explains why they view social media as a purchase destination compared to older generations.
Yet not everyone is sold on using social media for shopping.
“Of those who have not purchased via a social media platform, 45 percent don’t see social media as a destination for purchase and 33 percent don’t trust social media apps with my credit card number or other personal information,” said Schneeberger. “Additionally, consumers often prefer to complete their purchase on a web browser (16 percent) or want to see a product in-person rather than online before they buy it (15 percent).”
Avionos found that Facebook, Instagram, and TikTok are used the most to purchase products by young consumers.
“However, 56 percent of Gen Zers purchased an item using a different channel than they originally intended,” noted Schneeberger. “Since Gen Zers are more comfortable using digital channels and are more apt to use eCommerce and social platforms to complete purchases, retailers are more likely to tailor to this audience on their preferred social platforms given their heavy influence on evolving consumer behaviors. On the other hand, 45 percent of Millennials and Gen Xers used online platforms to purchase products to pick up in-store or through curbside pickup, so retailers are more likely to engage with them both online and in-store since they prefer to physically see products before they purchase them. This furthers the importance of scaling omni-channel commerce experiences to meet different customers where they want to engage.”