Joining us now for five insightful minutes is longtime friend of the show and partner and managing director at the A and M Consumer and Retail Group, Chad Lusk.

Chad will be discussing with us the results of A&M CRG's most recent biannual consumer sentiment survey report.

The report draws from a survey of over 2100 demographically representative US adults and analyzes how shifting economic conditions, among other purchase trends, are shaping consumer spending behaviors.

So, Chad, in your last two reports, you indicated some major projected pullbacks in terms of consumer confidence and future spending plans.

What are consumers saying their next six months and holiday spending will look like?

Yeah, Chris.

Well, you mentioned there's been a steady erosion in consumer confidence and plans to spend for a while now.

Now, there was a major step change downward last holiday season and that behavior has held.

Only 29% of consumers plan to spend more over the coming six months.

That's down 1100 basis points from a low point this time last year.

Worth calling out.

We fielded this survey prior to the election.

Of course, now we're past it.

But what consumers told us is the uncertainty of the election itself did not have a strong influence on their decisions.

What they told us is that's speculative.

And until I see real changes in inflation, interest rates, the job market, I'm going to continue to curtail spending.

So what does that mean for holiday Households plan to spend about 9% net less this holiday season compared to last.

And that's expected by reducing both total gift volume, not just average spend per gift.

And what does that mean then, Chad, for retailers when it comes to more discretionary categories?

Yeah, for sure it's troublesome.

But what's interesting is we may be seeing further shifts in what consumers are considering discretionary versus basic needs right before our eyes.

So for instance, for the first time this cycle where consumers said they'll get more conservative, anticipated spend in fresh food went down.

So normally fresh food goes up at the expense of restaurant prepared food spend and delivery.

This time fresh food interest went down in favor of dry packaged grocery.

So the trade offs are going one cut deeper for consumers.

Another example, wellness and fitness took a major step back, too.

It had been holding on pretty strong, but looks like that's falling back as well as far as a discretionary category.

So it's a, it's a fine line households are straddling now.

So we also ask consumers, if things do improve and you have additional income, where will you put it?

So the lower household income brackets are more inclined to either bank it or put it toward Groceries, which implies that they're still well below their satisfaction of basic needs, whereas upper household income brackets are ready to put it toward more discretionary purchases like dining out, delivery, travel and entertainment.

So there's some hope there.

So, Chad, I want to go deeper into what you just said.

So will cutting back on discretionary categories be enough for consumers or do you think consumers will also change their habits in regards to other basic needs as well?

Yeah.

So given the longstanding financial pressures we've been seeing this cycle, we went deeper with consumers on how they plan to cut back and in particular against basic needs like groceries and others.

So an interesting insight emerged here.

So consumers are more likely to change their purchase behavior than their shopping behavior.

So what does that mean?

Consumers were 25 to 30% more likely to switch to a cheaper brand or product at the same store than switch to a different, that is Less expensive retailer.

So the fascinating point there is that consumers will exhibit more retail banner loyalty over product brand loyalty when deciding how to cut back.

So that's encouraging for retailers and critical to ensure that they have a proper, good, better best merchandising strategy, including private label with clear indications of that value on shelf.

That's interesting, Chad.

It makes me wonder because last year we were talking about, especially around holiday, that this was going to be a much more digital, digital forward holiday customers were going to be shopping online.

Do you think that's going to be the case again, especially with the banner loyalty that you just mentioned?

Yes, I do.

And frankly that'll probably never change.

38% are planning to shop even more online than in previous years.

And there was a, there was already a 70% online versus in store preference for holiday shopping last year.

But that's for holiday.

So listen, for the past seven cycles we've done this report, nothing's really changed here, right?

In store is preferred by about two thirds of consumer.

But the generational patterns are interesting.

Right.

Your spikes for in store preferential shopping come from ages 55 and up and under 34 with a little valley in the middle.

And not surprisingly, the in store appeal is for different reasons.

Right.

Everyone wants the ability to touch and feel products and have immediate product availability.

That's, that's common.

But older demos are looking for better promos and deals in store and you know, younger demos.

Talk about just wanting to get out of the house.

Yeah.

Something to do.

Right.

So unlike other consumer trends where older shoppers are helping prop up kind of a waning consumer preference, here we see no signs of in store shopping going away.

And retailers can be comfortable continuing to invest in the right set of merchandise and experiences.

But going back to holiday, I mean, it is a similar story with online apps loyalty.

As you skew older, consumers are looking for additional value out of their online searching.

As you skew younger, the more they prioritize smooth and seamless user experience.

So retailers really need to meet both this holiday and always.

Thanks Chad.

Always.

Great stuff, Chad.

Thank you.