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* (800) 782-9042 * 9692 Haven Ave. Rancho Cucamonga, California 91730 * * * Search Responsive Menu 5 SPENDING PREDICTIONS FOR THIS FALL General, Payment Trends, Predictions 5 SPENDING PREDICTIONS FOR THIS FALL Co-op Solutions August 29, 2022 2 0 6 13 3 As the summer winds down, the state of the economy weighs on the minds of many. But the news is not all bad as some measures of economic health have shown improvement in recent weeks. The inflation rate hovered near four-decade highs in July, but decelerated slightly as energy and gas prices fell. Signs that inflation may finally be softening led U.S. consumer sentiment to rise in early August, continuing a slow recovery from record lows earlier this summer. The job market remained the most resilient corner of the economy, as non-farm payrolls rose by a robust 528,000 in July, easily outpacing consensus estimates and dropping the unemployment rate to 3.5%. But concerns remain of a looming shift from high-paying to low-wage jobs as a broad selection of major employers including Ford, Wayfair, Peloton, Best Buy, and Walmart have all recently announced their intentions cut staff. According to PwC, half of all companies plan to reduce headcount over the next six to 12 months. To help your credit union plan ahead for a busy fall season, here are 5 payment predictions from Co-op’s SmartGrowth experts: 1. Back-to-school season will be extended: Back-to-school is the second largest shopping season of the year, behind only the Winter Holidays in importance to retailers. That’s one reason why merchants are hoping for a particularly strong back-to-school season, as high inflation and ongoing recession fears could cause consumers to tighten their pocketbooks later this year. These same economic drivers may propel an extended back-to-school shopping period this year. According to a recent survey of over 2,000 U.S. parents, only 36% said they could afford back-to-school shopping for their children, down from 52% last year. And 37% are feeling stressed about being able to afford these purchases—up from 32% last year. These stressors are likely to help extend school-related purchases over a longer time period. The combined impacts of high inflation and the end of the pandemic stimulus check program means parents have less discretionary income to spend this year versus last. Cash-strapped parents will focus on buying only what is necessary to get their kids started in the classroom now—critical items like supplies and books, rather new clothes and shoes—while deferring discretionary purchases for later on in the fall. According to Beth Phillips, Managing Director, Strategic Portfolio Growth at Co-op, this year’s back-to-school season is starting to show some “Black Friday behaviors.” “It’s proved difficult to get some school supplies as well,” Phillips says. “From production issues causing dixie cup shortages to a race to obtain name-brand items requested by schools, last-minute shoppers experienced shortages and delayed delivery on certain items students need for the classroom.” 2. More choose to dine out as the economical choice: One beneficiary of the rise of the budget-minded consumer is discount retailers like Dollar General and Dollar Tree. For example, average spend on grocery items at this type of discount store grew by more than 70% over the nine-month period ending in June 2022. The same study found that grocery store spending fell by 5% between October 2021 and June 2021, spurred by rising prices on staple goods. Inflationary pressures are causing the highest inflationary gap between grocery stores and restaurants in decades, driving more consumers to dine out at fast-food and fast casual restaurant outlets, as these meals become comparative bargains for price-sensitive heads of households. Combined with a pandemic-weary public’s desire to get out of the home and enjoy social experiences like sit-down restaurants and entertainment, Co-op’s experts anticipate the strong growth in restaurant dining to continue through the rest of the year and into 2023. 3. Holidays will come early this year: While back-to-school shopping will be extended, Co-op’s SmartGrowth experts are also predicting an early holiday shopping season this year. “Retailers are pushing their holiday sales up sooner in the shopping cycle, hoping to catch early shoppers eager to capture good deals,” Phillips says. “To prepare, major brick and mortar retailers are ramping up their delivery, pick up, and in-store service offerings to compete with Amazon and other online-only merchants.” Meanwhile, let’s not forget about online shopping and digital services, which our experts forecast for continued, steady growth. “Sales of digital goods will continue to soar right through the holidays, highlighting the need for credit unions to fully digitize their offerings,” Phillips says. 4. Travel spending to increase: Travel has already had a strong bounce-back year in 2022, despite high fuel prices and overall inflationary pressures. According to the U.S. Travel Association, the combination of post-COVID pent up demand and consumer savings will provide for continued strong growth through 2022, with slower positive growth in 2023 in both the leisure and business travel sectors. The organization projects total travel expenditures of $1.05 trillion for all of 2022, rising to $1.15 trillion in 2023, which would represent 96% of pre-pandemic spend in the sector. 5. Credit card balances will continue to rise: As inflation stays hot and more consumers worry about impending recession, those with access to savings will hoard their cash, taking on more debt to pay for household goods and services. Unfortunately, not everyone has savings, and many are living from paycheck to paycheck. Recent surveys show that the percentage of Americans who are able to cover a $400 emergency expense has fallen from a high of 68% in November 2021 (when pandemic checks were still rolling in), to as low as 51% in May 2022. As consumers deplete their cash reserves, they will be forced to borrow on credit to cover monthly bills and non-discretionary expenses like gas and groceries. This is a major reason why Co-op’s credit union client credit portfolio balance data has been showing steady growth each month since late 2021, reaching a year-over-year growth rate of nearly 10% in June. What CUs should do to prepare: * Promote your Credit Union’s “every day” benefits Begin implementing your holiday season communications plan now, and make sure to shout it from the rooftops. Keep your key messaging clear and concise, and focused on your card products’ competitive differentiators—low everyday rates and minimal fees. Let consumers know that you developed your credit card products with your members in mind. While other credit cards may distract members from their high annual percentage rates (that are rising at record speed) by offering attractive short-term rewards, your card products alone can save your members money every day. Per NCUA, average credit union credit card APRs are just 11.32%, compared with a national average of 19.61%, according to a July Nerd Wallet article. Credit Unions must promote their overall service offering to members and non-members alike to push their cards top of wallet during holiday spend and beyond. As the table below illustrates, by choosing a Credit Union, whose average interest rate is 11.32%, a member can pay off an average balance of $3,000 with their credit union credit card, seven months sooner and save over $614. 2022 Average Interest Rate (APR) Average Credit Card Balance Monthly Payment 2022 Average Interest Rate (APR) Months to Pay Off Debt Total Interest Paid Industry 19.61% $3,000 $100 19.61% 42 $1,157 Credit Unions 11.32% $3,000 $100 11.32% 35 $543 7$614 * Use key merchant categories to incentivize holiday spend As you navigate this period of economic uncertainty, it’s a great time to activate your credit card rewards program, and offer special rewards to incent members to use your card at popular merchants, like discount stores, restaurants, airlines and hotels, that will member behaviors during this critical time of year. Don’t forget to analyze your cardholder data to create targeted campaigns before and during the holidays to specific segments that may need a nudge to move your card top of wallet – or those that are top spenders who can generate additional interchange. * Anticipate member need for balance transfer promotions to assist with post-holiday spend heartburn To help those members that are struggling with growing credit card debt on high-balance cards, offer low introductory rate balance transfers. This will both reduce their overall cost of credit, and encourage cardholders to maintain their primary financial relationship with your credit union. Optimize Your Portfolio with Co-op SmartGrowth: Fall is on the way, and it’s best to be prepared. Co-op SmartGrowth Consultants can help you maximize returns on your credit and debit portfolios. Discover how Co-op SmartGrowth can help you see beyond basic transaction data, analyzing your card portfolio to reveal new opportunities for growth. Contact us to learn more. RELATED POSTS: * 2021 Holiday Spending Predictions: Prepare Now for… * Fall 2021 Spending Predictions * 5 Consumer Spending Predictions this Spring 2 0 6 13 3 * ← It’s Time to Take a Multi-Pronged Approach to Payments Growth * Zelle® Helps Your Members Transact Remotely, While Staying Connected → Search INSIGHTFUL DOWNLOADS * CU Growth Outlook: Bridging member needs and payments strategy to deepen trust * The Layered Approach to Payments Fraud: Protecting the Credit Union While Galvanizing Member Trust * New Research Shows How Credit Unions Can Achieve Growth Through Member Centricity * Case study: Bringing payments under a single roof boosts efficiency, member experience and income * The Payments Playbook: A credit union CEO’s guide to wining the payments game ARCHIVES Archives Select Month September 2022 (2) August 2022 (5) July 2022 (3) June 2022 (4) May 2022 (2) April 2022 (3) March 2022 (6) February 2022 (3) January 2022 (6) December 2021 (2) November 2021 (2) October 2021 (6) September 2021 (3) August 2021 (4) July 2021 (3) June 2021 (3) May 2021 (1) April 2021 (2) February 2021 (4) January 2021 (1) December 2020 (2) November 2020 (3) October 2020 (1) September 2020 (3) August 2020 (6) July 2020 (4) June 2020 (7) May 2020 (7) April 2020 (6) March 2020 (7) February 2020 (1) January 2020 (2) December 2019 (3) November 2019 (2) October 2019 (3) September 2019 (3) August 2019 (5) July 2019 (2) June 2019 (3) May 2019 (3) April 2019 (1) March 2019 (3) February 2019 (2) January 2019 (4) December 2018 (4) November 2018 (11) October 2018 (11) September 2018 (7) August 2018 (8) July 2018 (10) June 2018 (12) May 2018 (12) April 2018 (11) March 2018 (15) February 2018 (11) January 2018 (10) December 2017 (10) November 2017 (12) October 2017 (12) September 2017 (14) August 2017 (13) July 2017 (14) June 2017 (13) May 2017 (17) April 2017 (14) March 2017 (16) February 2017 (18) January 2017 (13) December 2016 (11) November 2016 (19) October 2016 (17) September 2016 (14) August 2016 (11) July 2016 (10) June 2016 (9) May 2016 (12) April 2016 (12) March 2016 (12) February 2016 (4) January 2016 (6) December 2015 (8) November 2015 (8) October 2015 (10) September 2015 (7) August 2015 (10) July 2015 (8) June 2015 (8) May 2015 (6) April 2015 (9) March 2015 (11) February 2015 (9) January 2015 (10) December 2014 (9) November 2014 (9) October 2014 (8) September 2014 (12) August 2014 (9) July 2014 (12) June 2014 (8) May 2014 (12) April 2014 (12) March 2014 (11) February 2014 (13) January 2014 (11) December 2013 (1) May 2013 (3) April 2013 (2) March 2013 (1) February 2013 (1) January 2013 (2) December 2012 (2) November 2012 (1) October 2012 (1) August 2012 (1) July 2012 (1) May 2012 (5) April 2012 (3) September 2011 (1) July 2011 (1) June 2011 (2) May 2011 (4) April 2011 (1) February 2011 (3) January 2011 (2) November 2010 (1) October 2010 (2) September 2010 (2) August 2010 (3) July 2010 (1) June 2010 (3) May 2010 (3) April 2010 (7) March 2010 (5) February 2010 (3) January 2010 (3) CO-OP NEWS * Co-op Solutions Sponsors 2022 Presidents Cup Golf Tourney, Donating All Benefits to CMN Hospitals August 22, 2022 * Co-op Research Finds Credit Unions Can Challenge Fintechs with Daily Member Interaction via Payments August 19, 2022 * Coastal Credit Union Adds Co-op Digital Card Issuance In Renewing Its Partnership with Co-op Solutions August 19, 2022 * Co-op Solutions Adds Virtual Attendance Option to THINK 22, Announces New Keynote Speakers August 19, 2022 * Co-op ATM Makes Significant Expansion in Maine, Adding 60 Retail Locations to the Network August 19, 2022 RSS FEEDS * All Entries * General * Fraud & Risk * (800) 782-9042 * 9692 Haven Ave. Rancho Cucamonga, California 91730 POPULAR CATEGORIES * ATM * Authentication * Card Payments * Cryptocurrency * Data * Data Strategy * Debit * Digital Solutions * Fraud * Fraud and Risk * Fraud Prevention * General * Integration * Locations * Member Center * Member Experience * Mobile/Virtual * P2P * Payment Trends * Payments * Portfolio Management * Predictions * Research * Shared Branch * THINK * Uncategorized RECENT POSTS * Creating a Better Digital Experience for Members Leads to Growth * Zelle® Helps Your Members Transact Remotely, While Staying Connected * 5 Spending Predictions for this Fall * It’s Time to Take a Multi-Pronged Approach to Payments Growth * P2P Allows Credit Unions to Be There for Everyday Member Moments USEFUL LINKS * Co-op Solutions Website * Co-op Events * Co-op News * Co-op Solutions * Co-op Miracle Match Program * Co-op Career Opportunities * * * Copyright ©Co-op Solutions. 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