Data on changes in consumer shopping behaviors along with demographic trends indicate an "enduring shift" has come about as a result of the economic downturn, and consumer products makers and the retailers they supply to will need to adapt if they are to succeed in this new marketplace. These are the conclusions of a new report from PricewaterhouseCoopers LLP (PwC) and Retail Forward.
The study "The New Consumer Behavior Paradigm: Permanent or Fleeting?" reports that:
• Shoppers will be more deliberate and purposeful in their spending, as conspicuous consumption gives way to more conscious or practical consumerism.
• Deal-seeking will be replaced by more purchase selectivity and the use of shopping techniques and tools discovered during the recession.
• The affluent segment of Generation X and the younger Generation Y will lead spending in the recovery.
“The recession has tempered the rampant and excessive consumption, giving way to more mindful choices as shoppers increasingly seek out online and mobile coupons, comparison shopping sites, and loyalty and rewards programs,” said Lisa Feigen Dugal, PricewaterhouseCoopers U.S. retail and consumer practice leader. “As consumers become more invested with using these tools in their shopping experience, retailers will need to adapt their strategies to appeal to this new generation of consumers.”
Retailers will need to make promotion and savings-related information more easily accessible across all shopper touch points. With the explosion of online resources and mobile phone shopping apps making it easier than ever for consumers to find specific items, it is imperative for retailers and manufacturers optimize their search engine and paid search vehicle activities.
Although shoppers will retain some recession-induced behaviors, the post-recession shopper will be characterized as
purposeful rather than panicked. Today’s consumer will practice a more reasoned and rational trading down with deal-seeking behaviors like coupons and comparison shopping remaining post-recession.
As shoppers’ “wants” are steadily reintroduced into the equation, trading-down behavior related to the choice of retailer, product, or brand will lose some traction in the recovery. However, private label brands will remain a significant factor due to their increasingly higher quality and low cost since retailers don't have to advertise or promote them to the same degree as national brands.
One-fifth of consumers will continue to forgo buying items that seem too expensive, which means contraction in the luxury and gourmet foods markets. The emergence of a more thoughtful approach to spending on luxury and non-discretionary goods means shoppers will place a premium on goods that have qualities of timeliness, usefulness, and versatility.
“Although we’re starting to see signs of shoppers getting tired of trading down, they remain cognizant of today’s economic realities and need to balance that with personal desires to reward themselves,” said Mary Brett Whitfield, senior vice president at Kantar Retail. “Retailers and suppliers can take advantage of this “frugal fatigue” and offer affordable do-it-yourself alternatives to pricier products. For example, an at-home substitute to an expensive spa treatment or restaurant-quality meal takeout options that replace dining out will resonate with consumers during the post-recession.”
While Baby Boomers quickly led recovery in the last two recessions, this group was hit hard by the recession even as their financial commitments loom large and with retirement on the horizon. Marketers should look to the smaller Gen X generation and large Gen Y population to fuel growth in the early post-recession recovery.
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