Millionaires
In mid-to-late 2021, it was fairly common for everyone in DTC to be blaming poor business performance on iOS 14.5.
Only much later (for the DTC community, at least), when Common Thread Collective began showing the correlation between CAC and the Consumer Confidence Index, however, did it appear that, maybe, something else was going on, too. At the same time Apple rolled out its infamous software update, consumer confidence began to fall.
Why?
What’s become even more clear with the passage of time was that inflation went from 1.5% to 5% overnight. The data wasn’t part of the narrative in the moment, per se, but we had the feeling. Suddenly, there was just less money to go around.
While we don’t do much macro economics in this newsletter, it strikes us that much of the conversation around commerce in the last couple months comes back to the topic that most have moved on from.
In the last two months, Target launched a dollar-store knockoff private label brand, DTC struggled through a Meta problem, and the mainstream media is covering the boomer addiction with Temu at a terrifying clip.
Why?
It might be worth looking the same place as before. While consumer confidence is higher than it was in mid-to-late 2021, inflation is back to running ahead of expectations (a negative thing) after a positive end to 2023.
Suddenly, there’s just less money to go around again. Just like last time, though, consumers still want to spend.
We’ve become used to the “resilient consumer” narrative, and some of that may be true. We think it might be simpler, though: the parts of commerce we all celebrate are the parts of commerce that let people feel like millionaires. The desire to chase that feeling doesn’t go away when times get tough, and we’re finding that many are willing to “shop like a billionaire” to get it.