Retail: Is Consumer Confidence Rising or Falling?

John Krautzel
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A shaky economy reduces consumer confidence, making it hard for retailers to sell luxury goods and other items that consumers do not need for survival. Executives track metrics that relate to consumer confidence and use the information to create marketing and sales strategies for their companies. If you have never paid attention to any of these metrics, now is the time to start learning about how consumer shopping habits could affect your job or the stability of your company.


Retailers should expect an upswing in consumer shopping, as consumer confidence has risen considerably—in fact, Richard Read of The Car Connection reports that it is at its highest level in nearly six years. More than half the people living in the United States believe that the economy is improving, and a greater number of people are reporting improved personal finances. The Consumer Confidence Index has also risen to 76.2, a significant increase from the 69.0 of April 2013.


The Consumer Confidence Index gives retailers a great deal of information about what consumers are thinking. The results of the most recent survey indicate that consumers are feeling optimistic about the country's short-term economic outlook. The number of people expecting improvements in business conditions rose 2 percent from April to May. Consumers also believe that jobs are more plentiful than they were in April, as the number of people claiming jobs difficult to obtain fell 0.8 percent.


The effects of increased consumer confidence depend on your industry. Although increased confidence can drive shoppers into stores and prompt them to spend more money, it can also have a negative impact on pricing. The car industry is a good example of this trend, as prices rose in correlation with the increase in consumer confidence. The number of incentives available from manufacturers also decreased. Because experts are predicting steady growth for the American economy, consumers should expect to receive fewer incentive offers and even pay a little more for their vehicles if they decide to buy in the near future.


Unfortunately, price increases related to increased consumer confidence could have a negative impact on retailers, especially if those price increases come with unexpected changes to certain products. Technology, rising gas prices, and manufacturer strategy all play a role in how much each company can charge for products. Because retailers cannot control every possible price factor, they must adjust prices accordingly.


As a retail professional, you must understand how consumer trends affect your business. Whether you work as a front-line salesperson or a manager in the marketing department, you will need to use your knowledge and skills to convince customers to buy your products—and that's true regardless of whether consumer confidence is rising or falling. The ability to do so is one of the best traits of a successful retail professional.


(Photo courtesy of stockimages /


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