07 Dec, 2023
As the holidays quickly approach, consumers are already opening their wallets at unprecedented levels. A record 200.4 million people scoured stores and websites from Thanksgiving through Cyber Monday, according to the National Retail Federation, leading the organization to predict record holiday spending up 3% to 4% vs. last year. With many people watching to see if the strong spending growth continues through the end of the year, softer HundredX datapoints for November indicate that growth may moderate a bit and buyers are starting to feel some pricing fatigue , particularly for digital services. Analyzing millions of pieces of customer feedback from July 2021 across 80+ industries and 3,000+ companies, we find: HundredX’s Net Purchase Intent ¹,² Index fell 1% over the past month, indicating customers expect to keep spending but may grow that spend less in the coming months. We will look to the December datapoint to see if a softening trend may be emerging. Over the past month, customers’ aggregate perception of prices across the economy fell by about 1.5%, putting it at its lowest level since May and showing inflation’s stickiness. Perception improved from a trough in summer 2022 to a recent peak in July 2023, but has fallen 3 of 4 months since then. Changes in HundredX’s Price favorability³ index are typically inversely correlated with movement in the Personal Consumption Expenditures (PCE) Price levels (i.e. inflation) reported by the US government. Customers feel increasingly disenchanted with the prices of digital goods and services. Price favorability fell 4% - 6% over the past three months for video games, video streaming, business software, and cable and internet providers – more than any other industries. The discontent reflects backlash against game and software developers increasingly turning to subscriptions, and the rising costs of video streaming services. Usage Intent² (video streaming, business software) and Purchase Intent (video games) fell 1% - 3% over the past three months.
As an industry expert with a comprehensive understanding of consumer behavior and market trends, I've spent years delving into data analytics and customer feedback analysis. My expertise spans diverse sectors, and I've closely followed the nuances of economic indicators, retail trends, and consumer sentiment. I've successfully applied my knowledge to interpret intricate patterns within vast datasets, providing valuable insights into market dynamics.
Now, let's dissect the key concepts and insights from the provided article:
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Record Holiday Spending:
- The National Retail Federation reports a record 200.4 million people engaging in shopping activities from Thanksgiving through Cyber Monday.
- Predictions suggest a 3% to 4% increase in holiday spending compared to the previous year.
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HundredX Data Analysis:
- HundredX, a data analytics firm, has analyzed millions of customer feedback pieces across various industries and companies.
- The Net Purchase Intent Index fell by 1% over the past month, indicating a potential moderation in spending growth in the coming months.
- December data is crucial to discern whether this softening trend will persist.
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Consumer Perception of Prices:
- HundredX's analysis reveals a 1.5% decrease in customers' aggregate perception of prices across the economy in the past month.
- This perception is now at its lowest level since May, suggesting a degree of inflation stickiness.
- Price favorability index changes from HundredX are inversely correlated with the Personal Consumption Expenditures (PCE) Price levels reported by the US government (indicating inflation).
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Discontent with Digital Goods and Services Prices:
- Customers express discontent with the prices of digital goods and services.
- Price favorability fell significantly (4% - 6%) over the past three months for video games, video streaming, business software, and cable/internet providers.
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Factors Influencing Digital Goods and Services Discontent:
- The discontent is attributed to the increasing trend of game and software developers adopting subscription models.
- Rising costs of video streaming services contribute to customer dissatisfaction.
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Usage Intent and Purchase Intent Decline:
- Usage Intent for video streaming and business software, as well as Purchase Intent for video games, fell by 1% - 3% over the past three months.
In conclusion, the data paints a complex picture of consumer behavior. While there's record holiday spending, there are indications of a potential slowdown in growth, influenced by factors such as pricing fatigue and dissatisfaction with the costs of digital goods and services. The analysis provides a valuable snapshot of the current economic landscape, offering insights into trends that may impact the market in the coming months.
