The great economic divide: Bread Financial® study shows that younger consumers are more likely to view the economy with rose colored glasses

As we look ahead to the holidays and the New Year, a new Bread Financial study finds consumers want value and convenience when shopping and are willing to use AI to find deals 

COLUMBUS, Ohio – Oct. 28, 2024 – Bread Financial®, a tech-forward financial services company that provides simple, personalized payment, lending and saving solutions, today released the results of its third annual “State of the American Shopper” survey. In the report, younger consumers said they have a more positive outlook about the economy compared to older generations. Sixty-four percent of Gen Z respondents said the economy is either ‘excellent’, ‘very good’ or ‘good, (versus 40% of Baby Boomers), and are more confident they are on the right track financially (77% versus 70% of Baby Boomers).    

The 2024 State of the American Shopper leverages Bread Financial’s proprietary consumer data and includes survey results from more than 3,000 U.S.-based consumers and serves as a reflection of the general population’s sentiments on the state of the economy and consumer spending. 

While more consumers describe the economy in positive terms as compared to last year (49% up from 45% in 2023), more than half of all respondents still view the economy as fair to poor (51%) and cite inflation (64%), gas prices (56%) and interest rates (43%) as their main concerns. 

“Inflation remains a concern among consumers of all ages despite some recent positive signs from traditional markers of the economy such as healthy employment, record stock market gains and a slowdown of rising prices,” said Nick Antonelli, SVP, chief marketing officer, Bread Financial. “Consumers are adapting to a new reality in spending and have made tradeoffs or traded down as needed. It feels like a game of endurance as people adjust to the new normal.”  

According to the survey, 56% of consumers are focusing more on buying what they need rather than on what they want, while 54% say they are more budget conscious and careful about spending. Exactly half of respondents (50%) have shopped at discount stores in the past month. More than half (53%) say they are cutting back on spending this year – although that is less than those who said they were cutting spending last year (58%). 

Other insights from the report include: 

Customers are Increasingly Curious About Artificial Intelligence (AI) in Retail 
Nearly 60% of respondents said they have used AI tools. Twenty percent say they haven’t knowingly used AI technology, while only one in eight consumers (13%) say they are actively avoiding using it. 

Regardless of their exposure to AI, more than one-third of consumers (34%) say they are curious about how AI could improve their shopping experiences. Nearly half of consumers (46%) indicated they would use AI to find the best deal, 37% would want AI help in identifying when a desired product is in stock, and 34% would be open to receiving AI-generated prompts or reminders to use loyalty points, a coupon or other special offer. 

The data also suggests an apparent generation gap when it comes to the acceptance of AI in retail experiences. One in three Millennials (31%) believe AI will have a positive impact on retail while only 14% of Baby Boomers feel the same. 

Regardless of their exposure to AI, more than one-third of consumers (34%) say they are curious about how AI could improve their shopping experiences. Nearly half of consumers (46%) indicated they would use AI to find the best deal, 37% would want AI help in identifying when a desired product is in stock, and 34% would be open to receiving AI-generated prompts or reminders to use loyalty points, a coupon or other special offer. 

The data also suggests an apparent generation gap when it comes to the acceptance of AI in retail experiences. One in three Millennials (31%) believe AI will have a positive impact on retail while only 14% of Baby Boomers feel the same. 

A Major Generation Gap Exists Over Perceptions on the Economy 
Younger consumers are not only more positive about the economy but also report they are increasing their spending this year compared to a year ago, significantly higher than their older counterparts. Almost half of Gen Z (45%) and Millennial (44%) respondents said they are spending more this year while only 26% of Baby Boomers and 30% of Gen X say they are increasing their spending. Only 19% of Gen Z and 25% of Millennials are spending less compared to 38% of Baby Boomers and 37% of Gen X.  

More Consumers are Shopping in Store but also Seeking Convenience of Online Shopping  
The study also found that American consumers appreciate in-person shopping experiences. Nine in 10 consumers still shop in stores, and 34% say they are shopping in stores more often. 
  
But the return to in-store shopping hasn’t come at the expense of digital shopping. According to the survey, consumers across the board are getting more comfortable with digitally native purchases and are increasingly using their mobile devices to purchase goods and services. More than one-third of online shoppers (36%) made a purchase on a retailer’s mobile application (up from 33% in 2023), and one in five online shoppers (20%) made a purchase on social media (up from only 17% in 2023). 

About the Survey 
The 2024 State of the American Shopper survey was administered to 3,163 U.S.-based consumers in August 2024 with quotas on age and gender to reflect the general population. This included 754 Gen Z recipients, 868 Millennials, 822 from Gen X and 721 Baby Boomers. The 2023 survey was administered to 2,042 U.S.-based consumers in August 2023.