In this month’s Media Post, SLRG’s Jon Last reflects on recent consumer optimism barometer data, that throws caution to some of the current narrative about inflation
As a sports researcher with a media and public relations background, I’ve always been a follower of “spin.” I’ve often told a joke where a CEO calls a market researcher into his office seeking the answer for the sum of one plus one. The researcher replies, “What do you want it to be?”
I find this joke particularly relevant as we see a disproportionate number of headlines that suggest that inflation is no longer a big issue. This, coupled with observations of consumers’ throw-it-to-the-wind spending, has been accompanied by many sports and leisure properties aggressively raising prices. I’m a more-than-half-full guy, but I want to raise some cautions.
In our tracking of consumer sentiment, we’ve found meaningful data that makes pricing decisions far from easy. Nearly six in 10 fans indicate that they are much more budget-conscious heading into 2024. Barely over half of fans said this a year ago.
Concurrently, merely three in 10 strongly believe that the cost of everyday goods will improve in the coming months, while others feel the price of consumer items that they buy are somewhat or much higher now than they were prior to the pandemic, and this data point has not deviated in two years. Evoking Mark Twain, I’ll say that reports of inflation’s death are highly exaggerated.
Just last Friday, the economists at Armada Intelligence raised a critical observation consistent with our data and at odds with a popular narrative that suggests that inflation is under control. That is, while the rate at which consumer prices are rising is not as steep as it has been recently, the reality is that prices are still rising.
Armada cites analyses that show the average U.S. family needs $11,000 to $14,000 more per year to maintain the same standard of living as they did prior to the pandemic, noting that before COVID, that rate would have been a third to a quarter of that figure over the course of three years. Federal data, as well as our own, continues to show nearly all-time highs in the volume of U.S. credit card debt. So, people are still spending, but at what point does the other shoe have to drop?
Looking at other sports-fan-related data, I tend to subscribe to a derivative of the “K-type” recovery theory, where those in a more comfortable economic condition will be less impacted and continue to spend on sports and luxuries, while those at the opposite end of the spectrum continue to be squeezed. That theory has implications for pricing strategies that advocate for formal price elasticity analyses, with particular attention paid to variations across different demographic cuts.
At the end of the day, it all comes back to presenting a value proposition that isn’t solely about price, but about a positive return on sports investment. That is a different proposition for different people, and those marketers who continue to pulse it will be in a better position than those who blindly throw out offers. We all need to continue to keep our ears to the ground in what may indeed shape up as a tumultuous year fraught with amplified, partisan spin.