How Gas Prices Affect Consumer Behavior
Consumers spend about 4% to 6% of their monthly expenses on gas. For some drivers, it can rise to as much as 20%. Regardless of the particular percentage though, it’s evident that this change in price causes a shift in consumer behavior:
Effect on Retail (Clothing & Jewelry): Higher prices mean that shoppers will choose to drive less to places like the mall or shopping centers.
Large retail stores have switched marketing tactics to entice in-store customer visits, knowing that the bulk of consumers are deciding between using spare cash to buy a new outfit, book a vacation or go out to dinner. Tactics have included:
- $10-25 gas cards,
- in-store sales to ease the tension of buying when the drive itself was so expensive,
- and online shopping sales to compensate for decreased foot traffic.
A few Krispy Kreme shops dropped the price of a dozen glazed doughnuts to do just that!
Effect on Automotive Industry: Lower fuel prices make driving cheaper, consequently making automotive ownership more appealing. Gasoline prices have larger effects on the prices of used cars than of new cars, but they have large effects on market shares and sales of new cars. The automotive industry has historically responded to rising gas prices by using them as opportunities to manufacture smaller, more fuel-efficient cars, namely hybrids and all-electric cars.
Takeaways: Whether the prices continue to rise or finally fall, there are always opportunities to be found in economic shifts. Talk to an LTD Connect advisor today to go over what opportunities are available in advertising to meet your needs!