Consumer Sentiment Index 2024

Today's consumer is less brand-loyal, inundated with marketing messages across all apps and channels, pressured by debt and inflation, and increasingly demanding. But as loyalty has waned, customer acquisition and demand costs have grown, and retailers' profits have shrunk. Retailers need a new playbook.

AlixPartners has rebooted the historic Consumer Sentiment Index to provide a tool for retailers to evaluate and prioritize resources, operational and technological advancements, and growth initiatives to stay ahead of the fast-evolving consumer. Today's customer has been in the power-seat for several years, as the digital world evolved, and they are now frustrated. They are fatigued from the constant stream of brand content. They are overwhelmed by information, choices, and the need to comparison shop. And, they have a different suite of needs and expectations as they move across the fashion spectrum, from mass and off-price up to luxury, and from the center of the age-spread— Millennials—to the fringes.

The Consumer Sentiment Index, first launched in the 2000s, provides data on consumer prioritization of five key pillars: access, experience, service, product, and price. We find that top-performing retailers like Chanel and American Eagle are delivering on core consumer demands for their sectors. In luxury, it's service alongside product. For young adults, it's price and product with a nod to experience. Looking across generations, we see that Millennials want it all, while Boomers are keenly focused on value. Although it's not surprising that Gen Z are the most motivated by social shopping, only 3% of Gen Z called Shein the number one retailer when shopping for fashion online, which should cause retailers to pause and invest wisely in shiny new capabilities.

The expectations of today's fashion consumer are higher than ever when it comes to loyalty. Eighty percent of consumers are looking for an attractive loyalty program, but less than a third think retailers deliver. Programs that are not engaging consumers or incenting behaviors are flushing money down the drain.

Whether it's one-click checkout, availability of floor associates, or adequate product information, consumers across the spectrum want a smooth shopping experience, and will abandon the sale (and in many cases, the retailer) when they meet with friction. Here, we discuss key strategies for avoiding these pitfalls and providing a satisfying retail experience for fashion consumers.

1. Overview

The next generation of the CSI

In this chapter:

• Scope and pillars
• Ratings
• Fashion sectors
• Demographics

History and re-launch

In 2009, when AlixPartners last ran its Consumer Sentiment Index, e-commerce accounted for just 4% of total sales, and the iPhone was not yet two years old. The first Apple Store had opened about eight years before, inspiring an experiential revolution focused on customer engagement and interaction, establishing a new standard for store design, setting a record for sales per square foot, and anchoring Apple as one of the first retailers to offer in-store services like technical support—but few retailers followed suit, at least not immediately.

Walmart was expanding across America, T.J. Maxx had record sales, and luxury houses like Chanel would not touch e-commerce. Top-performing retailers focused on physical location, cleanliness, hours, parking, associate interaction, customer service, and, most importantly, surviving the Great Recession.

As we relaunch the CSI in 2024, shopping is transformed. Access is about being able to shop in-store, online, through an app, and on social media. Consumers comparison-shop across brands and expect a more personalized experience across channels. Within fashion sectors and between generational cohorts, there are important differences that laud some retailers as leaders and others as laggards.

Over its 10+ year run, the CSI illuminated shifting consumer preferences and trends across retail sectors. It helped retailers prioritize where to focus, invest, and divest. Today, given recession, disruption, peak acquisition & retention costs, and a growing array of shiny objects to invest in, the stakes couldn't be higher for retailers to put their money where it will have the biggest impact with their consumer.

Scope and pillars

In a July 2024 online survey of 9,000 consumers, we assessed the importance of each of the five pillars of excellence:

1 Access: Ease and convenience in shopping, entailing reliable inventory, location of stores, early access to deals, and mobile apps.

2 Experience: Connectivity to the brand, including customer engagement, personalized experiences in-store and online, and store layouts.

3 Price: Baked into the price point are beliefs about realized and perceived value, and competitiveness.

4 Product: Details around the goods themselves, including quality, craftmanship, trendiness, sustainability, and inclusivity.

5 Service: Tangible services that happen before, during and after the sale; and additional value-added services such as styling, and customization.

The reasons people shop haven't changed markedly in the 20 years since we started the Consumer Sentiment Index, but the way people shop has. Price, access, experience, product, and service all have profoundly different meanings in a world where free and fast shipping is seen as a baseline service, and where machine-learning is being used to deliver personalized product suggestions that speak to a customer's core identity. Investments in these areas have a strong ROI for some generations and a nullbenefit or net cost for others. The differences between consumer expectations across these sectors have valuable implications for retailers' strategies.

For the 2024 CSI, we determined the importance of the five key pillars by asking respondents to assign an importance rating to each of 50 retailer attributes. Consumers rated "the ability to find new products," for example, on a scale of 1 to 6, with 6 denoting that the attribute was the "most important purchase driver" on down to 1.

Example question (or "attribute") from the survey and rating scale:

Question: When it comes to shopping for apparel at department stores, how important is "ability to shop the brand/retailer no matter where I am" to you?

In most cases in this report, we refer to "important drivers," which include any responses where consumers consider attributes as "important," "very important," or the "#1 driver of shopping decision." The term "primary purchase driver" is used when discussing responses where consumers deemed attributes as "very important" or the "#1 driver or shopping decision."

Fashion sectors

Not all fashion retail experiences are created equal, and preferences understandably shift between consumers shopping luxury, where all pillars trump price, for example, and those buying fashion from mass retailers, where price is king (of course). Incorporating a view of preferences across nine fashion sectors was critical to helping retailers strategize how to best attract their unique consumer.

What we didn't expect were some of the nuances below the surface of the pillars. For footwear consumers, for example, high quality and craftmanship is the number one attribute, followed by reliable sizing, whereas for luxury, although product was number one, the luxury consumer appears to assume that quality is there—it doesn't impact purchase decisions. They just don't waste time thinking about it.

Major findings by fashion sector

Demographics

In addition, we layered in demographic information and found that while Millennials cared the most about every facet of the shopping picture, and proved the most demanding, Boomer consumers showed the greatest range. They care deeply about price and product, but their interest in the "experience" of shopping is much lower than for other generations. Gen Z, although highly followed and discussed, showed a less scrupulous view of all the pillars.

Although product and price take top spots, we found that the product/price "value equation" is unique to each sector and demographic.

Luxury & jewelry

customers expect the highest level of service during the shopping experience and are prepared to pay for it

Specialty & footwear

customers rank service the lowest, they cite easy & fast shipping & returns as top overall purchase drivers

Off price and mass & club

shoppers are shopping for deals; they cite "I feel like I am always getting the best deal" as the #1 driver of purchase

Top three retail CSI leaders by fashion sector

Consumers were asked to rank retailers in each fashion sector (126 in total) based on how well the company performs across the pillars

Although consumer sentiment does not always align to recent retailer or brand performance, it does tip off retailers to important consumer preferences, as we see in standout rankings for retailers like Columbia (in the outdoor sector) and T.J. Maxx (in off-price). In luxury, Chanel won on four of the five pillars.

So, what does today's fashion shopper want?

Well, it depends—your bottom line is riding on whether or not you deliver on key consumer wants by sector and demographic.

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