Ten Trends That Will Shape The Way We Live This Year

Consumers will evolve past being frugal this year by becoming more aware of their spending behaviours and looking for alternatives to buy goods in less traditional ways, said market research firm Euromonitor International in its annual prediction report.

The company’s annual trend report forecasts what consumers will value in the coming year and how companies should adapt to those behaviours. This year, consumers will change their spending in subtle ways. They will also even experiment with the metaverse, the research firm said.

“We see the middle class resetting and thinking about their spending, but we see that way beyond—everybody’s being a lot more frugal,” said Alison Angus, head of lifestyles research at Euromonitor.

Euromonitor traditionally begins the forecasting process around July. The fast-spreading Omicron variant has slowed down recovery efforts across industries and among consumers, but many of the forecasted trends are unaffected, Ms. Angus said.

Ahead are Euromonitor’s predictions for global consumer trends in 2022:

Supply-chain workarounds

Product shortages and disruptions have spurred consumers to use subscription services or buy secondhand to find what they want. Companies need to adapt to these individuals by offering alternatives to items, said Ms. Angus. Virtual queue systems present an opportunity for shoppers to get a place in line and hope they receive a product, the research firm said. Offering rental or refurbished products is another chance to keep that customer’s loyalty as does enticing them with exclusive or presale items.

Climate change becomes top of mind

The 26th conference of the Parties to the United Nations Framework Convention on Climate Change, otherwise known as COP26, made consumers think about their everyday actions in relation to climate change, said Ms. Angus. People are looking to cut back on food waste, reduce their plastic use and recycle more. Sixty-seven per cent of consumers surveyed by Euromonitor stated that they tried to do something every day to have a beneficial impact on the environment. Climate change and sustainability are trends that continue to evolve from previous years, but in 2022, younger consumers will have more of an impact on their peers, parents and grandparents.

Senior citizens optimize their digital lives

The pandemic forced many people to adjust their behaviours, such as shopping for groceries online for the first time. That trend was especially popular among seniors. Now, this group of consumers want to continue their digital use, and companies should respond accordingly by offering training, support and making products that are easy to use, the research firm said. For some companies, it may mean making an app or website function the same across all types of devices such as a laptop or smartphone, Ms. Angus said.

Taking control of finances

The pandemic’s instability caused many consumers to become more aware of their finances, as well as experiment with investing and trying out cryptocurrencies, the firm said. Companies should offer ways to educate consumers about their financial services or make products more accessible, such as lowering fees, Ms. Angus said.

Prioritizing personal values and goals

Thirty-four percent of people in the latest survey preferred to spend money on experiences as opposed to products in 2021, compared with 27% in 2015. Companies need to address the change by becoming flexible to what consumers want, whether they are still working or looking for a new job opportunity. “Last year, we were talking about consumers rethinking their priorities and what their life wants to be like,” Ms. Angus said. “This year…they’re actually making the changes.”

The metaverse switches from experiment to a reality

Consumers who were forced to conduct their lives online via video chats are now changing their behaviour to engage with digital worlds and communities, Ms. Angus said. Virtual concerts, sales of nonfungible tokens and dressing avatars are behaviours that consumers are tapping into, and some companies are meeting them there, the research firm said. “Any business can’t afford not to be thinking about this,” Ms. Angus said. “Because it is happening and consumers are going there.”

Secondhand loses the stigma

Buying items secondhand is no longer stigmatized. It has become a sought-after option for consumers who want to have unique items or are shopping on a budget. Options such as gift cards or buyback programs that promote secondhand shopping behaviours from consumers are winning them over. Companies should meet this demand by addressing consumers who want to bring in older versions of items and receive a voucher or repair them in-store, Ms. Angus said.

City residents opt for suburban and rural perks

People who stayed in cities and didn’t flee to the suburbs during the pandemic now want some of the advantages of living outside a city, such as having access to green spaces. Others want more services closer to their homes, with many still working from home, the research firm said. Companies should aim to bring shops and services closer to them that don’t require a train or car ride. “Making everything accessible to consumers within 15 minutes,” Ms. Angus said.

Indulgence in self-care and happiness

Fifty-six per cent of consumers expect to be happier in the next five years, the firm stated. To reach that nirvana, people are buying products that help their mind and body, such as cannabis products or meditation courses. Personalized shopping experiences that can predict a consumer’s needs will become a key component in reaching these people, Ms. Angus said.

Hybrid approaches to socialization

As the pandemic continues, consumers are becoming fragmented: those who want to go back to their normal lives and engage in social activities, and those who remain cautious. This means hybrid possibilities, such as digital visits or waiving cancellation fees, can address the needs of different consumers, the firm said. Products and services need to become multifaceted and seamless to serve this split consumer base, Ms. Angus said.

Tuesday’s retail sales report could be the scrap of evidence that tips the balance as Federal Reserve officials decide how much to cut interest rates on Wednesday.

It is practically a given that the central bank will reduce rates. Inflation has fallen to its lowest point since February 2021, giving the Fed more flexibility to focus on the second component of its dual mandate—achieving maximum employment. Although the labor market remains resilient, the most recent two jobs reports have been weaker than expected, putting some pressure on the Fed to loosen monetary policy.

The question now is by how much rates will fall—0.5 percentage point, or 0.25 point? The indications from interest-rate futures are split , recently favoring the more aggressive half-percentage-point decrease.

Andrew Hollenhorst, an economist at Citi , leans toward the likelihood the Fed is more cautious on Wednesday, cutting rates by 0.25 percentage points. But he notes that it it is a close call that depends on the dynamics of the bank’s rate-setting committee and the strength or weakness of Tuesday’s retail sales report.

A positive surprise would suggest that both consumers and the labor market remain resilient, paving the way for a more modest cut. If the report comes in well below expectations, however, Fed officials may grow concerned that a weaker labor market is weighing on consumer spending, which could lead to a bigger cut, Hollenhorst added.

Louis Navellier, founder and chief investment officer of the money-management firm Navellier agrees. “In theory, if the August retail sales report is horrible, then a 0.5% Fed key interest rate cut may be forthcoming on Wednesday,” he said.

Economists are expecting retail sales will decline by 0.2% in August from July, according to FactSet. They jumped by a surprising 1% in July .

Lower gasoline prices and car sales will likely drag the headline number lower. Indeed, stripping out car and gas sales, retail sales are projected to increase by about 0.3% month over month.

Yet there is growing concern that even excluding autos and gas sales, the sales figure will be soft. While spending was remarkably strong in July, the Fed’s latest Beige Book flagged that consumer spending ticked down in August, points out Bill Adams, chief economist for Comerica Bank . Many retailers, particularly those catering to lower-income shoppers, have warned that Americans are being cautious and exceedingly choosy about what they are buying and where.

The impact of the retail sales report will likely extend beyond the immediate rate cut. The insights it contains about U.S. consumers will also factor into the Fed’s quarterly update to its Summary of Economic Projections, containing officials’ latest forecasts for the U.S. economy, inflation, and near-term interest rates.

The so-called dot plot , which charts the individual interest-rate projections of the seven members of the Fed’s board of governors and the 12 regional Fed presidents, is always closely watched as investors try to chart the Fed’s future actions.

Hollenhorst believes the median dot showing where rates will be at the end of 2024 should show “at least” 0.75 percentage-point of cuts, factoring in 0.25 point at each meeting through the end of the year. But it is likely that officials will leave the door open for more cuts in case data on the job market or consumer spending sour faster than expected.