Contributed by Idea Collective Member:
Founder of the Idea Collective Small Business Community
We can all agree that everything is super expensive right now. If you’re anything like me, you’re meticulously making choices on how to spend your hard-earned money because it feels like there’s less of it to go around. The cost of living has soared, and it’s leaving its mark on our wallets.
How are your customers holding up in the face of this financial crunch? If you’re sensing that things are moving a tad slower than usual, you’re not alone. Sure, your average sale might still be relatively high because people do have dollars to spend, but that’s also because you had to raise your prices due to inflation. The bottom line is, it just doesn’t feel as bustling as it once did.
Now, let’s talk numbers. One key indicator of how inflation is affecting our B2C customers is a recent news story in the New York Post. It stated that credit card and car loan defaults have reached a 10-year high. Yes, you read that correctly—defaults at a decade-high. Analysts wasted no time pointing their fingers at inflation as the culprit.
One analyst was quoted as saying, “The increase in delinquencies is symptomatic of the tough decisions these households are having to make right now—decisions like whether to pay their credit card bills, their rent, or buy groceries.” Inflation has pushed people to make difficult choices, and it’s affecting their ability to keep up with their financial commitments.
But why is it so bad? Well, besides everything becoming more expensive, let’s shed some light on the debt situation. The average interest rate on debt currently sits at a staggering 20.6 percent, and credit card debt in the U.S. has soared past the one trillion-dollar mark. Yes, you read that right—one trillion dollars in credit card debt, all carrying an average interest rate of 20.6 percent. It’s a financial puzzle that has left many scratching their heads in disbelief.
It’s not quite the end of the world, but it’s lurking nearby. We might pull through and return to normalcy, which would be fantastic. However, it’s crucial to stay aware if you’re dealing with B2C customers right now. If you’ve noticed that people are clutching their wallets a little tighter and business seems slower, it might be due to the weight of these financial burdens.
Perhaps it’s the fact that the average car payment is now a whopping thousand dollars. Maybe it’s because mortgage applications have hit a 20-year low. The effects of inflation are far-reaching, and they’re impacting consumer behavior more than we might have initially realized.
While we can’t predict the future, it’s essential to keep a watchful eye on your B2C customers during these turbulent times. As the financial landscape continues to evolve, businesses that adapt and empathize with their customers’ struggles will likely come out stronger on the other side.
So, stay informed, stay empathetic, and navigate the ever-changing tides of inflation with your B2C business wisely.
Pat spent two decades in broadcasting management and hosting. After leaving the radio industry, he spent time consulting small businesses and realized the support system for entrepreneurs was broken. Where could you find help for improving small businesses and building real connections with other like-minded people. In June of 2020, the Idea Collective Small Business Community was born.
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