Catering to America’s ‘Affordability-First’ Consumers
Published 17 November 2022
With the US annual inflation rate at 7.7%, the vast majority of Americans (85%) say price hikes have affected how they shop (Morning Consult, 2022). We highlight how retailers, tech giants and streaming services are responding to this hyper-frugal cohort, with strategies including new bargain-minded search tools, product-leasing schemes, and data-for-discount deals.
Revealing an ‘Affordability-First’ Cohort
A study published this month reveals that for 26% of Americans, affordability is the top purchasing priority, versus factors including sustainability and health (EY, 2022). This is lower than several other major markets, including Japan (41%) and the UK (33%) but on par with the global average (25%).
Google, Klarna Boost Budget-Focused Search
Tech and payment giants are automating formerly laborious deal hunting, putting greater pressure on retailers to match rivals’ promotions or expand loyalty programmes.
This month, Google announced that it’s trialling several new features in the US and France. Expanding on a ‘price insights’ feature introduced two years ago, people searching for an item can now see its typical price range, as well as its price history. They can also get email updates on price fluctuations – similar to a feature launched by global payments provider Klarna in late 2020. Google product searches now also surface coupon codes and details on current retailer promotions, highlighting sales on the product in question.
Meanwhile, Klarna, which boasts 23 million active monthly app users, introduced multiple features last month, including a search tool that compares thousands of websites to find the best price for an item. Users browsing a product page in Klarna’s app can see whether other retailers offer a better price or cheaper delivery options, and any available coupons are automatically applied at checkout.
Best Buy’s Laptop Leasing
US electronics retailer Best Buy’s new Upgrade+ programme – which allows participants to pay for Apple laptops through small monthly instalments (from $20) – is positioned as “an affordable and approachable way” to secure up-to-date machines. After three years, participants can either upgrade to a subscription for a newer MacBook, settle the balance and keep their device, or return it. Best Buy partnered with Citizens Pay, the retail-payments arm of US bank Citizens, to implement the programme.
The concept is similar to British tech-leasing start-up Raylo, discussed in the Purse-Friendly Products section of Tech’s Economical Outlook.
Domino’s – Data for Discounts
In September, US pizza giant Domino’s ran a limited-time 20% discount on all digital orders, promoted as an Inflation Relief Deal. In mid-November, a week-long deal offered half off all pizzas ordered online. While not spelt out to consumers, in exchange the brand gained customer data (missing from phone or in-person orders) and potentially helped nudge consumers into an online ordering habit.
Netflix, Disney Add No-Frills Streaming
Netflix and Disney+ are introducing cheaper, ad-supported options, attempting to win share of the now crowded TV streaming market amid consumer budget-cutting and the end of the pandemic-induced home entertainment boom. Disney+’s plan is due to be released in December. Netflix – which said it lost nearly one million subscribers globally in Q2 – launched its low-cost Basic with Ads offering this month. For $6.99 a month, subscribers see commercials, get lower video quality, and can’t download titles. It’s available in 12 countries, including the US, UK, Australia, France and South Korea.
This strategy isn’t entirely new to streaming. Streaming service Hulu (majority-owned by Disney) initially launched with commercials in 2007, before introducing a higher-priced, ad-free option.
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