Everyone wants to get consumer behavior back to “normal”, but normal is not coming back, if it was ever here. So what do retailers and brands have to look forward to from consumers in 2024? Here are four key questions that consumers will answer, one way or another, about what is the new normal for their behavior.
Will consumers embrace GenAI or will they reject it in favor of genuine human expression?
No one is on the record saying that GenAI will have little to no impact on consumer behavior in 2024. Most of the consensus seems to be that in general, consumers express a wariness about GenAI and what it can mean both for society in general and for themselves, personally. However, they also believe they will benefit from GenAI, though these benefits may come without them being directly aware that they’re using it – whether that’s through an improved customer service experience, through better, more relevant offers, or through improved product recommendations.
However, what happens after that takes two widely divergent possible paths. Either, GenAI will unleash human creativity by making it possible for anyone to access tools to boost and enable creative endeavors that were previously inaccessible (maybe only with some prompt engineering experience). Or GenAI will unleash such a flood of low-grade content that consumers will reject it in search of more genuine human-generated content and material.
Consumers are already wary of “The Algorithm” and how it sits behind the scenes to dictate what they experience, especially on social media. That awareness has extended to how much The Algorithm influences content creators themselves – who face conforming to The Algorithm to be discovered, or do something unique that risks never getting discovered at all. GenAI is could be described as just a tool to more easily and rapidly play to The Algorithm, which suggests that the content it produces will quickly lose its appeal to consumers.
In general, consumers value human interaction more than they value bot interaction – one study found that people are more likely to stick to a diet plan, for example, when there is both a bot and a human involved than if they are only interacting with a bot. Apparently, you can’t automate accountability. On the flip side, people have an ingrained need to anthropomorphize everything. People who were given a chatbot with a face were much more likely to view it as a another being – to the point of naming their bot, and protesting when the bot was taken away at the end of the study.
This apparent contradiction is the crux of this consumer behavior question. At the end of the day, will consumers embrace conversational bots driven by GenAI, and all the creative output that can come with that, or will they deal with it in their lives because they have to, but elevate genuinely human creativity as a counter-balance? The answer is not necessarily black and white – it could be that in some cases, the bots win and in others, human creativity takes the lead. But this question will definitely be put to the test in 2024.
Will consumers let companies step back from cause-based marketing or demand even more?
Much as past business students learned from the New Coke fiasco and subsequent case study, future students will learn from the Bud Light / Dylan Mulvaney fiasco. The lesson to be learned is easy: what happens in Vegas decidedly does not stay in Vegas. Anheuser-Busch thought they could speak to one constituency (the kind that thinks Dylan Mulvaney is great) without the other constituency (the kind that does not) finding out. In this age of transparency, that was a huge mistake. No brand can get away with talking out of both sides of its mouth at the same time.
But many, many brands have built their brand identity and value proposition around staking a claim one way or another. This positioning is, by definition, limiting – by appealing to one group, you are almost explicitly excluding yourself from consideration by the other side, and while it’s a sad state of affairs for politics, it’s a challenge for any company looking to grow.
Unfortunately, consumers expect companies to take some sort of stand, and to demonstrate genuine support of the stand they take. Bud Light tried to play both sides and lost – they lost both sides. Could they have avoided the issue altogether by trying not to do anything to provoke anyone? Possibly. But now the genie is out of the bottle, and consumers are looking to understand what it is companies actually stand for. Thanks to Bud Light, brands aren’t going to be able to opt out of this conversation. Trying not to stand for anything risks just as much as picking the wrong thing – and waffling in your conviction will doom you on both sides.
So, I don’t think it’s going out on a limb to say that we’ll see Bud-Light-The-Sequel in 2024. Another brand is going to step in it (it’s too complicated of a landscape to avoid that) and be punished by a lot of consumers and probably Wall Street, all at the same time.
Will consumers renew their trust in companies and brands or will anti-corporatism and anti-consumerism take hold?
Inflation was hard on everyone, brands and consumers alike. But the last year or so of corporate earnings has shown that it’s been a lot easier on some brands than others, who have hiked prices beyond their own cost increases and reaped the rewards in earnings. At the same time, some brands have chosen to mitigate cost increases through “shrinkflation” (making the item smaller for the same price) or through “skimpflation” (putting in fewer ingredients or lower-quality ingredients for the same price). You can do that once or twice, but more than that and consumers really start to notice.
This has played out before, but what’s different this time around is the amplification effect of social media. Again, what happens in Vegas doesn’t stay there, except this time it’s Wall Street. Record earnings reports are one viral post away from blowing up in the face of your latest “we’re all in it together” ad campaign.
As a result, consumer trust is likely at an all-time low for brands. As Accenture reports in its Life Trends 2024 consumer survey, “where companies see brand survival, consumers see greed.” And this perception is contagious – consumers will easily transfer suspicion about one brand to all others, whether deserved or not.
A lot of companies are claiming that they are planning on shifting to brand marketing in 2024 – to rebuild trust in the brand – or focusing on driving unit growth even if it means giving back some of the margin gains they’ve achieved post-pandemic. Will it be too little / too late? Social media is, by its nature, an outrage machine. Consumers are already suspicious of The Algorithm. It doesn’t take too much to extend that skepticism to the brands promoted by The Algorithm.
On the flip side, consumers still love brands – “their” brands. And consumers still fall prey to a lot of human psychology around choices. Brands are a shortcut to making a choice that alleviates cognitive load, especially in a time when consumers are actively seeking to reduce that load. It may well be that even after expressing outrage about practices they see as predatory, consumers still support the same brands they always do. But do you want to bet on that outcome?
Will consumers continue to spend or pull back?
I saved the biggest, most important question for last, and in some ways it’s built on whatever conclusions come out of the other three above. If consumers embrace GenAI, then possibly it could release a renaissance of creators. If they reject it, then human production will suddenly be worth a lot more, but that’s a much smaller pie. If consumers remain angry at companies – for what they stand for or don’t stand for, or for how profitable they are and who’s paying for that – then the reaction could be to pull back on spending all together.
There are other factors impacting consumer spend in 2024. Some surveys, like Forrester’s consumer technographics, point to an end to “revenge spending” and the beginning of a wallet detox. Others, like McKinsey’s consumer surveys, point to consumers already trading down or buying less. Trend forecasters like Brand Intimacy and Nextatlas say consumers will seek selective splurges, or, my favorite from Nextatlas, “microdosing their gratification.” That all speaks to a big slowdown in consumer spending overall, but planned splurges for specific things at specific times. And what they’ll splurge on and when will vary significantly by customer – whatever drives their gratification.
And travel won’t save that spend, as tourists look more to second-tier cities to avoid crowds. And while they plan to shop on vacation, it won’t be the same level of shopping tourism that we saw before the pandemic, where shopping might’ve once been the whole focus of the holiday, now it’s more about getting out and experiencing new cultures, and maybe buying a few things along the way.
So the answer may be that consumers do both. They continue to spend on random luxuries, smaller luxuries, planned splurges. But they also pull back or trade down everywhere else. Or, heck, who knows? They could just keep on spending like there’s no tomorrow, for no discernable reason. That would definitely be 2023 The Sequel.
The Retail Bottom Line
Consumers move fast, and by comparison, the retail industry moves slowly. It’s one of the things that makes retail challenging. Consumers are moving faster than ever, and no one can predict which way they’ll go, not least because they’re not one monolithic entity. But in a year when retailers are craving predictability more than ever, paying attention to these four questions may give you some early indicators – if you can keep up!
Read the full article here