Believe it or not, consumers are spending again. But they are not always spending on the categories that vendors would expect. And consumers aren’t spending as much as economists would expect at this point in an economic recovery, either.
For example, consumers are saving 6.4% of their take home pay which is a huge jump from 2007 when spending rates were high and only 2.7% of take home pay was saved. The change in consumer sentiment, both with respect to saving and what they’re buying, has some marketers rethinking the way they promote their products.
Consider the following spending levels on specific categories. The figures represent seasonally adjusted annualized spending based on the first half of 2010. The percentages in parentheses show the change in the category from 2007:
- Electronics (TVs, computers, phones, cameras) $153.3 billion (+.67%)
- Furniture $87 billion (-11%)
- Household appliances $44 billion (-2.3%)
- Tools/equipment home/garden (-5.3%)
- Glassware/tableware/utensils (-.82%)
The clear winner in the durable goods category, when it comes to capturing consumer dollars, is electronics. Economists such as Chris Christopher at IHS Global Insight caution that technology spending only comprises “1.2% of nominal gross domestic product”. Spending in this category isn’t likely to drive improvement in the overall economy but marketers in slower growing industries have seen an opportunity.
Writing for the Wall Street Journal, Emmeline Zhao notes that retailers in the apparel industry are promoting electronics giveaways to appeal to shoppers. And traditional TV and appliance stores are adjusting both their product and marketing mix – shoppers are seeing more electronics and fewer washers and dryers on the floor.
Some could argue that the shift in shopping patterns is linked to the stalled housing market and the decreasing need to fill new homes with furniture and appliances. Or the trend could be the result of consumer interest in new entertainment options. The fast-growing tech category has a ways to go before it reaches the saturation point. Either way, marketers in more industries will be finding ways to tie technology and electronics angles into their advertising to boost sales.[Source: Zhao, Emmeline. Tech Gadgets Steal Home-Goods Sales. Wall Street Journal. 4 Aug. 2010. Web. 6 Aug. 2010]