Inflation, the threatened government shutdown, the uptick in COVID-19 cases…who knows the cause, but consumer confidence is down again. That’s two months in a row that Americans have been worried about finances, in spite of a strong job market and much improved inflation rates.
Consumers also say they’re buying less. True, their spending is still higher than pre-pandemic levels, but this seems to be caused by the higher prices. People are buying fewer grocery items and paying more for them. In response, they are cutting back on discretionary spending on items like electronics and clothing.
People also report that they are choosing less expensive items and shopping with less expensive retailers.
How does this affect manufacturers?
Clearly, if customers are buying fewer items, manufacturers will find themselves with smaller orders. If shoppers go for lower prices, brands may cut corners and work to keep their manufacturing costs lower. Demand falls and supply must follow.
It’s bound to affect manufacturers as well as retailers.
What can manufacturers do?
A focus on value can help. Consumers who are nervous about the future want the highest quality they feel they can afford. Buying fewer items leaves less room for items of questionable quality or even for unfamiliar brands or goods.
Direct online sales to consumers may be a good way for some manufacturers to add a revenue stream that appeals to value-conscious shoppers — as long as sales tax compliance is factored into the financial planning.
It’s also essential to maintain control of costs. With wages rising, this may be the perfect time to consider repair or reman for existing machinery rather than upgrades. If you need repair or reman for Rexroth motion control systems, we should be your first call. Call (479) 422-0390 for immediate assistance.