Shifting habits in consumer spending 2023
In 2020, we saw significant changes in consumer spending habits, particularly as it relates to household savings and online shopping trends. Although building household savings intensified in 2021, this trend did not carry into 2022. On the other hand, online shopping continues to grow. Learn more about shifting consumer spending habits and how you can better serve clients during this time.
Spending Trends & Opportunities to Better Serve Clients
Trend: Household savings have declined despite economic uncertainty
Households typically build more savings in times of economic uncertainty to be prepared for any loss in income during a recession. This historical household savings trend intensified during COVID-19 as many consumers pocketed their stimulus checks from the federal government and any savings from reduced spending during the pandemic.
The personal saving rate (as measured as a share of disposable personal income) averaged nearly 20 percent during the first quarter of 2021 – far higher than the seven percent average from 2010 through 2019. In fact, saving rates hadn’t been this high since the early 1970s. This is paired with consumer concerns around price increases.1
Despite being exceptional throughout the pandemic, the personal savings rate reached a decade low in 2022.2 This drop in personal savings was driven by the spike in inflation, which created a lack of disposable income for households. Although the personal savings rate has fallen, reaching 3.1% in September of 2022, it could rise again over the next year as consumers reevaluate their financial standing in an uncertain economic environment. 3
While clients may be feeling the stress around increased costs, independent agents can ease their concerns by taking a more consultative approach and offering discount opportunities to help manage insurance costs. More specifically, they can use these strategies:
Opportunity: bundling insurance policies
With economic uncertainty looming, price consciousness may lead more consumers to be interested in bundling their insurance policies.
Our Agency Forward Survey found consumers believe bundling their policies saves them money (69%), time (57%), and consolidates bills into a single payment (52%).
- 51% of agents see bundling to retain customers. However, there are some misperceptions agents may need to address:
- 33% of consumers don’t want to bundle because they think they already have the best rates
- 25% of consumers don’t want to change their current set-up
- 46% of agents think customers are wary of added costs
- When it comes to Nationwide products, consumers can save an average of 20% when bundling home and auto policies
Additional considerations around bundling include:
- 71% of consumers bundle policies under the same carrier, and 7-in-10 prefer to have their policies with the same carrier
- 59% of consumers expect insurance agents to bundle policies with larger or well-known insurance carriers (62% of Black American consumers and 69% of Hispanic consumers think this)
In addition to bundling, work with clients to understand additional discount opportunities, including:
- Going paperless—Opting for email when bills, documents and other important insurance notices are available online reduces both paper waste and costs, a win-win.
- Quoting early—Quoting in advance of coverage start may save an extra 5% on a premium.
- Updating bill payment method—Paying in full or through a recurring EFT (electronic fund transfer) may yield reduced premiums.
- Choosing telematics—Electing a usage-based auto insurance program, such as SmartMiles and SmartRide, enables insureds to save up to a 40% discount based on mileage and safe driving practices.
- Opting for higher deductibles— Increasing deductibles for home and auto may offer premium reduction opportunities.
- Remaining claims-free—By avoiding losses, homeowners may qualify for a lower premium on their insurance when they stay claims-free.
Trend: Online shopping trends for 2023
While online shopping was becoming more common before the pandemic, COVID-19 forced consumers to shop differently. In the beginning of 2020, many shoppers remained at home for their personal safety and because of stay-at-home orders. Consumers were purchasing essential items all from the comfort of their own home.
After experiencing the convenience of online shopping, consumers are not turning back. In fact, in the second quarter of 2022, e-commerce accounted for 14.5% of all U.S. sales.4 To help save money, consumers are also researching before they make purchases. At the end of 2022, eighty-six percent of consumers in surveyed markets say online sources help them make more informed decisions.5
As 2023 moves forward, experts have identified several new trends that are expected to shape online shopping in the coming year. Social media and mobile shopping are set to further impact the online shopping landscape and preparing for this trend will be essential.6
Opportunity: prioritize your digital marketing
With more consumers shopping online and researching before making any purchases, make sure your digital marketing efforts are sharing your story, services, and value.
Taking the time to adapt your digital marketing strategy can make all the difference in whether a potential client chooses your agency. Consider reviewing these components for your digital approach:
- Optimize your website
- Boost your social media presence
- Adopt sales innovation that increases efficiency
View these tips for digital marketing in an uncertain world
Consumer spending moving forward
This article offers a glimpse of the potential economic challenges with changing consumer spending trends and opportunities in 2023. Learn more about supporting personal lines clients during uncertain economic times.
Google-commissioned Ipsos Consumer Continuous study, AR, AU, BE, BR, CA, CL, CN, CO, DK, FI, FR, DE, IN, IT, JP, KR, MX, NL, NO, PE, ZA, ES, SE, U.K., and U.S., ~n=500-1,000 online consumers 18+ per market, Sept. 8, 2022–Sept. 11, 2022.