Trading Down Trend Gains Momentum as Persistent Inflation Prompts Consumers to Opt for Lower-Priced Products Across E-Commerce Categories

According to recent reports, consumers have been opting for lower-priced products across various e-commerce categories due to persistent inflation. This trend, known as “trading down”, has been observed by market data provider Adobe Analytics in several categories including personal care, electronics, apparel, home/garden, furniture/bedding, and grocery. In fact, Adobe’s data indicates that the share of the least-expensive goods in all these categories has significantly increased over the last few months. For instance, the share of the least-expensive goods in the personal care category has surged by 96%, while electronics and apparel have witnessed an increase of 64% and 47%, respectively, in their shares of lowest-priced products. Similarly, the share of the cheapest goods for groceries, home/garden, and furniture/bedding has risen by 33% and 42%, respectively. Online shoppers have also been trading down in other categories such as sports goods, appliances, home improvement, and toys, although to a lesser extent. However, Adobe Analytics notes that despite this trend, total online spending remains resilient, thanks to stable expenditure in electronic and apparel goods, as well as growing expenses in the grocery segment. Overall, online sales for the first six months of 2024 are predicted to exceed half a trillion dollars, driven by fresh demand rather than higher prices. This pattern aligns with the increasing popularity of “buy now, pay later” programs, which some retail experts and financial lending providers consider the new layaway. These developments come against a backdrop of persistent inflation, with the Consumer Price Index having risen by 0.4% in March and reaching a peak of 9.1% in 2022, as reported by FOX Business.