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Marcie Connan, Executive Vice President at Dig Insights, led a study to find out the ins and outs of how inflation is actually impacting consumers. Ian sat down with Marcie to discuss consumers’ emotional and behavioral responses to inflation, some of the most impacted and resilient product categories, and more.
Welcome to Dig In, the podcast brought to you by the minds at Dig Insights. We're interviewing some of the most inspiring brand professionals in marketing, innovation, and insights to discover the story behind the story of their most exciting innovations.
00;00;06;23 - 00;00;19;06
Speaker 1
Hi. Welcome to Dig In the podcast brought to you by Dig Insights. Every week we interview founders, marketers and researchers from innovative brands to learn how they're approaching their role and their category in a clever way.
00;00;22;06 - 00;00;41;23
Speaker 2
Welcome back to Dig In. This week, I'm very excited to be talking to Marci Cronin, one of our very own executive vice presidents at Dig Marcy ran a really interesting inflation study that is, by the way, available on our sites for free download. Marci. So glad to have you here today.
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Speaker 3
Thanks for having me again. It's a really hot topic and looking forward to discussing it with you.
00;00;47;26 - 00;00;52;20
Speaker 2
So first, can you just start with a quick overview on what the study was, who you talked to?
00;00;53;23 - 00;01;16;27
Speaker 3
Yeah, absolutely. So, you know, inflation is a hot topic, it seems everywhere you go in the news media. You're hearing that consumer is are feeling the pinch. And it was really important for us to really understand how this rise in prices is impacting consumers, both kind of practically as well as emotionally. So we decided to to reach out and get the voice of the consumer firsthand.
00;01;16;28 - 00;01;30;29
Speaker 3
We spoke to just over 3000 consumers in Canada and the US about their experiences and really wanted to scratch into, you know, their situation, the challenges they're facing and how they're adapting in this situation.
00;01;32;16 - 00;01;56;12
Speaker 2
And so to set the stage for anybody who hasn't left their house, have tried to fill up a tank of gas and having gone grocery shopping, we're at 40 year highs for inflation. 31 year high in Canada. 40 year high in the US. Maybe it's crested a little bit in the US actually as of April. But Canada keeps on going up, so people are feeling the pinch.
00;01;56;13 - 00;02;02;04
Speaker 2
Can you talk to us a little bit about what the emotional response has been from consumers? Let's focus on Canada.
00;02;03;03 - 00;02;33;12
Speaker 3
Yeah, absolutely. So, you know, it was really interesting to see in this study that inflation is not just kind of impacting people functionally, but there is a real emotional stress that's being felt by consumers. Almost two thirds of Canadians said that they're feeling stressed about money. Over half are overwhelmed with their financial burdens. And interestingly, again, almost two thirds are actually fearful that they're not going to have the finances necessary to manage their older years independently.
00;02;33;24 - 00;02;44;18
Speaker 3
And I think that was really striking for us when we looked at the results, because it's not just a point in time situation, but people are kind of imagining and envisioning how this could potentially impact them for years to come.
00;02;45;16 - 00;03;05;07
Speaker 2
Yeah, I mean, that's the scariest thing about inflation is that it eats away at your savings if you're not if you're not getting at least the inflation rate on your savings, then you're losing money every year that your money sitting in the bank. And that's why it's so important that the governments get inflation under control. So fear is a very natural reaction.
00;03;05;16 - 00;03;19;27
Speaker 2
But not everybody uniformly had this overwhelming fear reaction. You actually did a segmentation in your study where you found there were three discrete groups of people who were reacting to inflation in different ways. Can you talk a little bit about that?
00;03;20;20 - 00;03;43;26
Speaker 3
Yeah, certainly. And it was interesting because we didn't really set out to do in it a segmentation. But as we started looking at all the factors that seemed to influence the experience for Canadians and Americans, we realized that, you know, there were significant swings in people's experience based on where they are from a lifestyle standpoint, where they fit, you know, from a socio economic standpoint.
00;03;43;26 - 00;04;09;06
Speaker 3
And even things like gender and household composition really kind of shaped people's experience So we did do a segmentation looking at many of the attitudes and behaviors tied to their reaction. And we found three groups, a group that's struggling, one that's adapting through inflation. And a group that we've called still thriving. And based on those names alone, it may kind of paint a picture of what those groups are all about.
00;04;09;14 - 00;04;33;24
Speaker 3
But interestingly, the group that's struggling is the largest of the segments in Canada. 42% of consumers fall into this group. And this is a group who is who is truly feeling the pinch. They are making significant changes to their behaviors in terms of how they shop, what they buy and what they spend to help them, you know, attempt to kind of keep pace with the increased cost of living.
00;04;34;03 - 00;05;04;28
Speaker 3
But unfortunately, this is the group that really feels that they've been unsuccessful so far in keeping pace. They feel that they're making compromises. It's not just about, you know, giving up some luxuries for this group. They're truly making compromises and their financial security is is quite at risk. So, you know, tying back to those emotions we just spoke to, and they're the group that's feeling the most overwhelmed and stressed not only about their current situation, but about their future as well this hour.
00;05;05;18 - 00;05;06;02
Speaker 3
Oh, sorry.
00;05;06;04 - 00;05;13;21
Speaker 2
Sorry. I have to say, we're focusing on Canada here. But did this distribution of these segments differ substantially in the U.S.?
00;05;14;12 - 00;05;28;19
Speaker 3
It was quite similar in the U.S., yeah. Actually, the the struggling group was almost identical in size within the U.S. There were a few more in the still thriving segment versus the adopting segment. But in broad strokes, it was quite a similar distribution.
00;05;29;18 - 00;05;36;00
Speaker 2
Excellent. So sorry. Please continue with describing the other two segments, the adapting in this Yeah.
00;05;36;00 - 00;05;59;10
Speaker 3
So we'll move on to the adapting segment. And this is a really interesting group because they are a segment that actually has quite a high debt load and is most concerned about losing a job in the next six months. But they're actually not particularly concerned about financial security from a lifestyle standpoint. This is more of the kind of millennial and Gen Z segments.
00;05;59;10 - 00;06;18;15
Speaker 3
They're a little bit earlier in their life stage, but they admit that they're not particularly impacted and they tend to be a group that is taking things in stride. They're not showing the same emotional stress that the struggling segment is feeling. And I think that's partly because this is a segment that very much feels that they can control their situation.
00;06;19;07 - 00;06;41;10
Speaker 3
Their response has been less about, you know, giving up or, you know, changing their behaviors. On more the practical elements in life. But they're being clever in doing things like, you know, renegotiating their mobile plan, maybe swapping out some of their subscriptions for streaming services and music. So they're making substitutions and switches and trying to be smart about their spend.
00;06;41;17 - 00;07;01;19
Speaker 3
But it's not in the same kind of product focused way that we saw with the struggling segment. And I think for that reason, they're feeling that they're going to come through this. They're being clever and finding ways to adapt and get by and they're not particularly feeling negative about the experience overall. We also have a third segment which is called Still Thriving.
00;07;01;19 - 00;07;21;18
Speaker 3
And as the name suggests, this is a group that's not particularly impacted by inflation at this time. This is a segment that tends to skew a little bit older. There are more mature segments Think about your boomers and kind of Gen X segments, and this group kind of has the sense that they've been here and seen this before.
00;07;21;24 - 00;07;44;24
Speaker 3
They're a little bit less rattled if you will, about the inflation experienced today. And that's partly because they're quite established in life already. You know, unlike the adapting group, that's a little bit younger they aren't going through things like their first home purchase at this time, and they're quite established in their careers. And as a result, their behaviors are the least likely to have changed because of inflation.
00;07;45;05 - 00;07;49;14
Speaker 3
They're feeling quite calm, prepared, and even optimistic about their future.
00;07;49;27 - 00;08;06;26
Speaker 2
Fantastic. Thanks so much for that. So if we're talking about the emotional side of things, if we get into where the rubber hits the road for our clients, the behavioral and let's talk a little bit about what are people doing to try to adjust their spending habits.
00;08;07;11 - 00;08;29;29
Speaker 3
So it's interesting, we tied into a lot of the a lot of core consumer products to find out where people were most feeling the pinch from inflation and importantly, how they're how they're responding to that with their behaviors in store. And in broad strokes, there are a few things that people are doing. One, they're they're kind of voting with their feet in terms of which stores are getting their their dollars.
00;08;30;07 - 00;08;55;13
Speaker 3
Shopping behaviors have shifted so that we're seeing, you know, not surprisingly, more of those trips going to discount channels, whether that's discount grocery, even dollar stores. We saw that. 17% of Canadians had subscribed for a club membership in the last few months, specifically because of inflation. So retailers like Costco and such are getting a little bit of a bump right now.
00;08;55;13 - 00;09;25;23
Speaker 3
And most of that's coming at the expense of conventional grocery stores. But what was really interesting is that consumers are not afraid to put in a little bit more time and effort to try to get their products that they love for the same price. So they're investing more of their personal energy, whether that's hunting for deals, you know, looking to leverage fliers, making multiple trips and also doing a bit of bulk buying and stocking up when they see a good deal But there are certainly some categories that are impacted more than others.
00;09;26;11 - 00;09;54;10
Speaker 3
Top of that list is all the fresh foods, whether that's fresh produce you know, proteins, your meats and such. This is an area where people are really feeling the pinch and feel that they're they're taking on more action to to counter that. But there are some categories that have been much more resilient in the face of inflation. And interestingly, that tends to be things like the you know, the comfort elements, you know, some beverages, snacks and sweets.
00;09;55;00 - 00;10;19;27
Speaker 3
People are still maintaining their current behaviors in those particular categories. What's interesting is some of the kind of healthy product categories I've had a lot of buzz are really feeling the brunt of inflation right now. And a great example of that is plant based milks, whether you're talking nut milk or soy. Consumers are saying, you know, I'm actually taking a pause right now and not buying that category.
00;10;19;27 - 00;10;37;20
Speaker 3
Like I once was, which is a little bit unique compared to some of the other products that a lot of our clients carry. So those healthy things that may have seemed like a bit of a luxury or indulgence are among those that are most likely to be either pared back or are very sensitive to price promotions at this time.
00;10;38;23 - 00;11;00;29
Speaker 2
Oh, boy. So we get we are in the pandemic. Everyone was drinking too much and making breads, and now we're going into inflation and we're all cutting back on expensive, fresh and dairy alternatives. So we're going towards we're sticking with prepackaged. I think we're all going to be in big trouble in this next year. But let's hope inflation.
00;11;03;19 - 00;11;08;18
Speaker 2
Thanks so much, Marcy. I think that's really fascinating. How many categories in total that you did we do a study.
00;11;09;17 - 00;11;20;00
Speaker 3
We did over 40 categories in. So yeah, everything from household and personal goods to beverages and pantry staples and everything in between. So there's a little bit of something for everyone in the study.
00;11;20;27 - 00;11;41;10
Speaker 2
Well, thanks so much for giving us a taste of it. You know, there's a lot to cover in this study. We could potentially go on for an hour, but I don't think that is the best use of a podcast medium. But I think we hit some really good high notes here. Any final thoughts about the study or anything surprising that you'd like to leave listeners with?
00;11;42;10 - 00;12;12;19
Speaker 3
Yeah, I mean, I think one thing that struck me coming out of this study, Ian, was that, you know, consumers are resourceful bunch at the end of the day. And although inflation may not be the most positive situations for many consumers, there's actually a lot of pride and resilience among consumers. And in some of the qualitative storytelling in this project, we heard about the pride that people had in the fact that they were using this, you know, in terms of the silver lining to really, you know, reconsider their priorities.
00;12;12;19 - 00;12;34;02
Speaker 3
Think about what's important to them and their families and and, you know, find ways to be clever and adapt you know, their habits to to keep pace and make sure that they are coming out on top. So I think that's one really positive note that I'd throw out there. And and if you're interested in learning about how your particular category is impacted and what your consumers are being are doing to be resilient, feel free to reach out.
00;12;34;08 - 00;13;01;25
Speaker 2
So if you want more about this study, we're going to link to it in the description so you can find the direct link in the description below and please do download it. There's a lot of really important information that this is definitely something that we're going to keep a close eye on and we're going to try to track this through because we know that there's going to be more impacts from how the government combats inflation if we end up in a recession if we end up in stagflation, how behaviors are going to move over time.
00;13;01;25 - 00;13;28;18
Speaker 2
But this is really important information for everybody right now, particularly if you are a retailer or if you are in CPG. So please check it out. And if you're unable to find the link, feel free to reach out to us directly. And happy, happy information to everybody because I think we're in another phase here where we really need to understand how credit, how the current situation is going to impact consumer behavior.
00;13;29;01 - 00;13;32;28
Speaker 2
Again, here we go again. So thanks again, Marci.
00;13;33;14 - 00;13;34;02
Speaker 3
My pleasure.
00;13;38;14 - 00;13;45;12
Speaker 1
Thanks for tuning in this week. Find us on LinkedIn at Dig Insights and don't forget to hit subscribe for a weekly dose of fresh content.