Economic development organizations and investment companies can measure consumer confidence without solely relying on survey data. Location intelligence, built on human mobility patterns, can easily provide organizations with insights into consumer behavior.
Consumer behavior and confidence often go hand-in-hand, and are measured by what is commonly referred to as the Consumer Confidence Index. In surveying a significant portion of the population residing in any given country, one is able to gauge the degree of confidence felt about a country’s economy. Most companies know that when consumers are confident about the economy, they are more likely to feel better about spending their money. However, when consumer confidence is lower, they are more likely to save their money. This index gives companies meaningful insights into the direction and state of the economy.
A quick example of this is The University of Michigan’s consumer sentiment index, which dropped more than 13% from July to August of 2021. This is a concerning plunge that is only beaten by the 19% drop in April of 2020 that was spurred by the beginning of the COVID pandemic. A large part of this could be due to the uncertainty around the Delta variant and the potential impact this will have on the economy. This is in stark contrast with Bloomberg’s Consumer Board which reported optimistic increases in consumer confidence earlier this year. It’s important that businesses consider the possible implications of the Delta variant and growing consumer prices due to global staff and product shortages and act now to increase consumer confidence.
Investment companies, market research firms and economic development organizations (EDOs) can use insights from location intelligence to help better understand consumer confidence and prepare themselves for potential future highs and lows. Here is how brands can keep ahead of the curve and measure consumer confidence.
Provide Data Enrichment for Investors
Foot traffic trends can tell investment companies a lot about consumer confidence, and location intelligence provides investors with the insight into how consumers move around. This data can be crucial for investment companies as they are gauging the levels of consumer confidence.
Take car buying for example. According to recent data from McKinsey, consumers are back to buying cars more so this year than compared to 2020. Say that an investment company is attempting to measure consumer confidence around car buying, but prior data is not providing enough insight into current consumer activity in the automotive industry. By utilizing location intelligence along with car purchasing data, investors have a clearer picture into why the ratio of visits to purchases isn’t as high as it used to be due to low supply, even though consumers are returning to their showrooms. Insights from location intelligence could indicate in this scenario that consumer confidence in the automotive industry might not be as high as expected and provides investors with the additional data they need to not only update their current strategies, but also continue to predict future consumer trends around car buying behavior.
Market Research with Consumer Confidence
Since location intelligence is built on consumers’ foot traffic in the real world, it is able to provide market research firms with a more comprehensive path analysis for their clients’ customers. Brands can easily gain insight into not only where their audience is shopping, but also why by using pre and post-visit consumer data. This can be valuable information for market researchers when clients are wanting to understand customer loyalty and measure consumer confidence for a specific area of interest.
Location intelligence can also help market research firms determine whether consumers prefer any competitors over their clients and potentially how clients can win customers back. Market researchers, with the help of location intelligence, can assist clients in understanding the impact that consumer confidence is having on their organization and develop an actionable business plan for the best outcomes.
EDOs and Consumer Confidence Data
While consumer confidence data can be valuable for investors, municipalities should also consider using insights from location intelligence to inform strategic planning. By understanding consumer insights built on human mobility patterns, economic development organizations (EDOs) can better understand economic activity and determine areas that could use assistance with business growth.
In 2020, many people were moving, often from cities to suburban or more rural areas, in response to the pandemic. With many consumers moving around, this meant fluctuating consumer demand in different areas. To support these new shifts in consumer expectations, EDOs could analyze consumer foot traffic data to determine what types of businesses the community needs.
Let’s say an EDO is scoping out a particular area to determine what consumers are most likely to spend money on. They conduct an analysis using location intelligence and find that many people in this area are young, urban professionals who recently moved into the area in the last year. Based on location analytics, the EDO also determines that local parks and recreation centers have seen increased foot traffic as a result and that these people are spending more time at sports and recreation retailers. From these insights provided by location intelligence, the EDO can prioritize reaching out to businesses related to outdoor recreation that would be predicted to succeed in this area.
Consumer Confidence with Location Intelligence
Consumer confidence is going up across the board, but EDOs and investors need a way to keep up with shifts in consumer behavior trends related to economic activity. With location intelligence, they can predict future consumer behavior patterns and better understand how consumer confidence is impacting businesses.
Location intelligence provides companies with insights to identify growth opportunities, understand the business environment and consumer confidence, and improve the customer experience.