How are marketers to understand the intentions of recession-wrought American consumers? In a recent Businessweek article, Devin Leonard writes “[t]he new abnormal has given rise to a nation of schizophrenic consumers.” Economists continue to watch consumer behavior to discern patterns and predict the future but trends appear to be all over the place.
Confidence may be at an all time low this summer, but consumers are spending more money. A Consumer Reports survey says the average household is shelling out about $40 more a month. Often, the money for this spending is coming at the expense of planned savings. Over half of consumers admit to being behind on savings plans for the year. Here’s why they are spending:
- Unanticipated emergencies 30%
- Buying on impulse 20%
- Difficulty balancing wants versus needs 20%
- Spending outside of means 17%
- Lack of strategy/planning 16%
One noticeable trend, analysts believe, is that consumers believe there is “little difference in quality on many household items.” As a result, people have shifted to generic CPG brands to reduce spending on a regular basis. This practice helps shoppers feel that they are saving.
At the same time, people want to splurge a little on special experiences and products. The need to splurge is underscored by the statistics listed above — 20% of the time people cannot balance their wants with their needs when they're shopping. As a result, spending on affordable luxuries is increasing and this explains why Apple and Starbucks are doing well.
Chief economist for the International Council of Shopping Centers Michael Niemira points out that low end and high end marketers thrive during a recession. It’s the middle market that will not pick up until the economy recovers. In the meantime, marketers are left to track spending trends and launch creative campaigns to convince consumers that their product or service falls into the category of ‘must have’ or ‘affordable luxury’.[Source: Leonard, Devin. “The New Abnormal.” Businessweek. 29 Jul. 2010. Web. 11 Aug. 2010]