Companies holding out for a consumer rebound could be waiting for years and find that by the time shoppers do come back, the rules of the game will have changed.  Analysts predict there will be fewer retailers and stores, more e-commerce and mobile shopping, as well as an entire generation of consumers who are struggling to make ends meet.

MANY YOUNG ADULTS STILL DEPEND HEAVILY ON MOM & DAD

Generation Y shoppers — who are coming into their own and range from about 18 to 29 years old — are learning to live in leaner times, relying on their parents and deferring the parenthood and home ownership.  Since spring 2007, the number of doubled-up households — which the Census Bureau defines as a household with someone older than 18 who is not in school and is not the householder or the householder’s partner — grew by 2 million to 21.8 million.

A total of 5.9 million 25- to 34-year-olds lived with their parents this spring. And although these adults had an official poverty rate of 8.4%, the Census Bureau said 45.3% of them would have qualified as impoverished if only their own incomes were taken into account.

GENERATION Y

Members of Gen-Y seem intent on using their digital tools to the fullest as they sift through the endless options online and turn to comparison shopping apps.  But even if younger people were not constantly connected to the Internet and tied to the latest gadget, they would have a much different consumption profile than older generations, changing the complexion of retail. Gen-Y is a generation that has for whatever reason delayed adulthood, waiting longer to have kids and putting off home ownership in favor of renting.

It’s a generation that is temperamentally more attuned with the Baby Boomers than their Gen-X predecessors, said Kit Yarrow, a consumer psychologist at Golden Gate University and co-author of “Gen Buy: How Tweens, Teens and Twenty-somethings Are Revolutionizing Retail.”

“Our values around spending and money usually develop when we’re 12 and under,” Yarrow said. “It doesn’t mean [Gen-Y is] not going to adjust to economic realities, but in their heart, I think this generation is always going to feel fairly optimistic and feel that having things and buying things are really part of who they are.”

The changes and challenges represented in this new kind of consumer will continue to keep retailers on their toes and, perhaps, force them to rethink how they approach their business.

CONSUMERS SPLURGING ON LUXURIES WHILE PARING DOWN ON BASICS

Consumers at all income levels have been splurging on indulgences while paring many humdrum household expenses, according to industry data for the last year. Many retailers also report that while items like purses and perfumes are best sellers, they cannot get shoppers interested in basics like diapers, socks and vacuum bags.

Consumer psychologists say that in this uncertain economy — coming after one of the worst recessions in generations — it is just too hard being good all the time.

“When the crisis hit and people really started to feel a pinch in their pocketbooks, they started to spend less across the board, especially in discretionary kinds of things,” said Vicki G. Morwitz, a professor of marketing at the Stern School of Business at New York University. “But it’s difficult, I think, for people to do that for a long time, even when they need to.”

SHIFT IN BUYING PATTERNS

Consumers’ buying patterns have shifted since the recession, when shoppers stocked up on basics but consumer spending and overall retail sales plummeted. Now, despite persistent consumer pessimism, spending is holding up, retailers have posted consistent profits and some luxury retailers are reporting especially strong results.

Economists say the spending does not translate into a broader shift in consumer confidence, nor does it point to an economic revival. In the long run, basics are the bread and butter of retailing, and when they slump, the industry as a whole eventually feels the pinch. Also, some analysts say, many shoppers remain price-conscious, even about their indulgences. That means they tend to gravitate toward cheaper imports, which might help on the retail employment front but does not create manufacturing jobs domestically.

[Source:  Clark, Evan.  “U.S. Retailers Face Generational Shift.”  Women’s Wear Daily.  21 Sept. 2011.  Web.  15 Oct. 2011; Clifford, Stephanie and Martin, Andrew.  “In Time of Scrimping, Fun Stuff is Still Selling.”  The New York Times.  23 Sept. 2011.  Web.  15 Oct. 2011.]