Deal Chasing Becomes Mainstream — and Merchants Shouldn’t Be Happy

PYMNTS - Consumer Inflation Sentiment: The False Appeal of Deal-Chasing Consumers - March 2023

American consumers remain pessimistic about the economy despite recent positive indicators. Consumers still expect elevated inflation rates for the foreseeable future, even as inflation has begun to trend downward.

In this challenging environment, merchants must decide how best to attract customers. One would be forgiven for thinking deal chasing is at the forefront of the battle for shoppers’ favor. PYMNTS’ research, however, paints a very different picture: These consumers are a large but ultimately unprofitable group.

Consumer Inflation Sentiment: The False Appeal of Deal-Chasing Consumers,” an independent report from PYMNTS, surveys 2,116 consumers to better understand how inflation and increased prices of consumer goods affect their shopping habits and relationships with retailers and grocers.

Here are some of our key findings:

Deal chasing has become mainstream in the United States, with nearly half of the consumers shifting to merchants with more significant discounts and offers in the last year.

Nearly half of grocery and retail shoppers would leave their favorite brand for a less expensive competitor. While lowering prices may attract these consumers temporarily, that strategy alone may not be enough to turn them into repeat customers. Building brand loyalty remains a profitable strategy, especially when businesses consider that loyal customers and persuadable consumers outnumber deal chasers.

Deal chasers are the most pessimistic about inflation stabilizing and have lost the most purchasing power.

More than half of deal chasers report that their wages have stayed the same or decreased in the last 12 months. Although deal chasers and persuadable consumers have seen inflation take similar hits on their purchasing power, deal chasers are more pessimistic about excessively high inflation’s duration, expecting it to last until close to the end of 2024.

Good deals or ease of shopping alone are not enough to please increasingly discerning, cash-strapped consumers.

When deciding where to shop, even loyal customers investigate a merchant’s ease of shopping and prices. Thirty-four percent of deal chasers and 35% of loyal customers say ease and convenience were the main reason they chose where they most recently shopped for groceries. Just 13% of loyal grocery shoppers and 18% of loyal retail shoppers cited loyalty and familiarity as the primary driver of their choice in where to shop for their last purchase.

Better prices attract deal chasers but may not convert them to long-term customers. We found that 62% of deal chasers said prices and discounts drove their most recent retail purchase, suggesting that most would shift merchants again for lower prices. On the other hand, our data shows that 63% of persuadable retail shoppers and 68% of loyal retail shoppers are motivated by factors other than price.

To learn more about how merchants can better appeal to cash-strapped consumers, download the report.