As the economic recession begins moving into early recovery mode, US consumers are developing a financial mindset based on avoiding risks and taking responsibility, according to a new whitepaper from trends research firm The Futures Company.
The report, entitled “Darwinian Gale: The Recovery Consumer Marketplace in the Era of Consequences,” suggests that consumers will not abandon the marketplace in the wake of the recession, nor will they automatically show preference for the cheapest brands. However, they will bear more economic risk and responsibility in mind when making shopping choices, reports Retailer Daily.
For example, the white paper finds this mindset will produce the following results:
- Consumers will be less likely to accumulate short-term debt to finance purchases.
- Consumers will allocate more money toward retirement.
- Consumers will buy quality goods, but will not spend more for the sheer sake of having a larger size or more prestigious brand name.
- Increased prioritization will lead consumer decisions about whether to shop in a specific product category as well as for a specific brand, pitting brands against categories as well as against other brands.
Government Figures Support Findings
Figures from government reports on consumer economic activity support the general findings of The Darwinian Gale. According to the BEA’s Personal Income and Outlays report, consumers decreased spending in September while increasing saving. US consumers’ personal consumption expenditures (PCE), which essentially reflect consumer spending, dropped $47.2 billion, or 0.5%. This decrease outpaced decreases of less than 0.1% in consumers’ personal income and disposable personal income (personal income less current personal taxes). Meanwhile, consumers increased personal saving from $307 billion to $355.6 billion, a 15.8% increase. This reversed severe consumer saving declines of 34.5% in August, 10.4% in July and 26.3% in June.
In another illustration of one of the paper’s key points drawn from real life, consumer electronics chain Blockbuster has experienced significant financial difficulties in the past year, with poor performance in its DVD rental segment a major contributor. Yet healthy fiscal performance by competing online movie rental service Netflix demonstrates consumers have not abandoned renting movies, they have simply moved on to a less time- and effort-consuming way of executing the transaction.
Value is the New Black
The report from The Futures company affirmed recently published predictions from Brand Keys, which said that although US economists are cautiously predicting an uptick in consumer spending next year, the post-recession landscape will present brand marketers with new challenges, new engagement realities and new rules, and will increase pressure to prove how and why branded products deliver value. In articulating these trends, Robert Passikoff, president of Brand Keys, declared that “Value is the new black.”
Another study, commissioned by Decitica, found further evidence that the recession will likely have a profound effect on future consumer habits. Decitica found that consumers in the US are shaking out into four distinct purchasing and attitudinal groups based upon how they have internalized the current recession and how they plan to spend after the economy improves. These four groups ares Steadfast Frugalists, Involuntary Penny-Pinchers, Pragmatic Spenders and Apathetic Materialists. The groups are characterized by the? frequency, satisfaction and the self-efficacy they associate with a variety of spending, purchase and consumption behaviors.