After a challenging 2023, nearly half (49 percent) of consumers worldwide are confident that their financial situation will improve in the coming year. This is according to latest research from Paysafe, which reveals a consumer landscape characterized by a mix of optimism, caution and a willingness to adapt spending habits.
The research surveyed 14,500 consumers across Europe, North America and Latin America for Paysafe’s “Lost in Transaction 2023: The Disposable Income Report,” which reveals how consumers are changing their discretionary spending. The research was conducted on behalf of Paysafe by Sapio Research in October 2023, and covers the U.K., U.S., Canada, Germany, Austria, Bulgaria, Italy, Peru, Chile, Brazil, Mexico, Colombia, Argentina and Ecuador. It explored changing consumer spending behaviors and attitudes towards payments.
What did it find?
Optimism is particularly pronounced among Millennials and Generation Z, with 57 percent of each group expressing confidence in their near-term financial future. However, consumers acknowledge improvement will require more proactive measures as they manage high living costs and their money differently—with half intending to alter their spending habits. In terms of discretionary spend, the research also indicated that a growing proportion of consumers are prioritizing in-home entertainment (23 percent) more than before, with nearly a third saying they will spend less on clothing (32 percent).
Conversely, over a third of consumers (37 percent) admitted to saving less due to rising living costs or not saving at all (18 percent). Despite this, 47 percent believe they will be able to save more in the coming year.
In response to the changing financial landscape, more are turning to budgeting tools and apps for assistance. These apps are primarily used to plan how to save as well as how to balance various expenditures and how to better manage discretionary spending. A substantial 55 percent of respondents said they already use these apps, and 38 percent plan to increase their reliance on them in 2024.
Good new for the travel industry: The research also revealed a shift in how consumers plan to allocate their disposable income. Over two-fifths (42 percent) are opting to spend less on physical goods, instead prioritizing spending on experiences, even as costs rise. This is especially so in the U.S. (51 percent). This shift to increasing spend in the experience economy is reflected in consumer attitudes to travel, Paysafe notes, which should maintain its upward trajectory as 43 percent are planning on spending more or the same on package holidays and 41 percent on flights.
While budgets have tightened, spending on online sports bets (18 percent) and in-game purchases (19 percent) have remained the same before inflation and the cost-of-living crisis. Regarding online spending over the past six months, 31 percent expressed no preference between large and small ecommerce businesses. As consumers navigate an evolving economic environment, businesses, whether they may be small or big, should pay attention to shifting trends and tailor their offerings to meet the changing needs and expectations of their customers.
An ongoing concern in the online shopping experience continues to be security. There is clear reluctance among many to share financial details online, with only 43 percent comfortable doing so with a small business versus 56 percent with a large one. Small businesses must resolve these security challenges to take advantage of positive signs for next year given some 42 percent intend to shop more at local businesses in 2024.
For more information, visit www.paysafe.com.
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