The road to business growth isn’t always straight. Its topography is littered with winding corners, steep slopes, and plenty of speed bumps. So, as a shipper, it’s important to remain agile and vigilant.
In a previous post, we explored a few ways shippers of consumer goods can prepare for some of these twists and turns. Today, we’ll keep exploring this topic with recent consumer behavior research.
In February 2024, McKinsey & Company revealed several shopping habits that have surfaced, along with a growing confidence in the economy. From splurging on groceries to trading down to value-based brands and products, these behavior shifts are key for planning your freight transportation spend.
U.S. consumer optimism is steady
McKinsey reports that U.S. consumers expressed a more optimistic outlook of the economy due to signs of price stabilization and labor market resilience.
Despite the improved macroeconomic outlook, however, recent inflation data revealed that prices are still climbing faster than the U.S. Federal Reserve’s target. Given that nearly half of consumers still cite inflation as a major concern, McKinsey states that purchase behaviors may fluctuate.
For example, “trading down”—opting to purchase more affordable or less quantity of goods—has gained popularity among consumers. As prices continue to rise, McKinsey estimates that trade-down behaviors may expand from low- and middle-income earners to include high-income earners.
But…selective splurging is on the rise
According to McKinsey, 40% of consumers expressed an intent to splurge in the near future—a two percentage point increase from the end of 2023. Gen Zers and Millennials said they were more likely to make these types of purchases compared with older groups. Looking deeper, high-income Millennials reported the biggest increase in intent to splurge—up 12 percentage points in February 2024 compared with the fourth quarter of 2023.
In addition, more than one third of respondents said they expect to splurge on food in 2024. But rather than dining out, U.S. consumers said they intend to spend more on ingredients for cooking at home. This trend was also most observed among Gen Zers and Millennials.
Looking forward
All in all, McKinsey says consumers continue to show cautious confidence with their spending and behaviors. What results is more of the uncertainty that we’ve experienced the past few years but, this time, with an undercurrent of optimism.
What does it all mean for shippers and how can they act on this information? You may not be shipping groceries, but you can still use these insights to inform your approach to freight and logistics in 2024. Here are five things shippers can do to prepare for shifts in consumer demand:
1. Build flexibility into your logistics timeline. While research-based projections are helpful, no one can truly predict the future. And consumer demand does fluctuate without warning. So, our first tip is to prepare for spikes in orders according to McKinsey’s research but plan to be flexible throughout 2024 and beyond as you ride the consumer demand rollercoaster.
2. Lock in your transportation service provider. Next, choose your freight transportation provider for the year. Work with them to secure capacity and devise a plan for your peak freight shipping season(s), as much as possible.
3. Prioritize warehouse organization and management. Lend a hand to your future self by making sure your warehouse is organized and easy to manage. Taking the time to make any necessary updates when loads are light can help your team keep freight logistics running smoothly during busy shipping periods. Need help? Get some tips from an Amazon Freight warehouse expert.
4. Reduce excess inventory where possible. Surplus inventory takes up space and is costly for your bottom line. Where feasible, look for ways to decrease your excess inventory and right-sizing it to align with current and historical shipping trends for your business. And, while you’re on a roll, make sure you have reliable tracking for all items in your warehouse.
5. Ensure visibility into your shipments. Finally, work with your freight provider to make sure you have reliable visibility into your shipments. Tech-enabled load tracking can bring you peace of mind and allows you to provide more accurate freight delivery estimates to your customers—which helps to boost brand loyalty and sentiment.
Grow with Amazon Freight
To meet consumer demands, make sure you have a freight transportation provider who’s ready to supply the capacity you need. With our more than 50,000 trailers and access to the Amazon network, Amazon Freight gives you a safe and reliable shipping service. Create your account and start getting quotes immediately.
