NEW YORK, March 9 — With new shopping behavior data and demographic trends indicating that an enduring shift has taken place as a result of the recent economic downturn, retailers and suppliers will need to adapt to consumers’ new shopping behaviors to succeed in today’s evolved marketplace and during the post-recession recovery, according to a new report from PricewaterhouseCoopers LLP (PwC) and Retail Forward, a Kantar Retail company, entitled The New Consumer Behavior Paradigm: Permanent or Fleeting?.
As outlined in the report, shoppers will be more deliberate and purposeful in their spending, as conspicuous consumption will give way to more conscious or practical consumerism. Rampant deal-seeking will be replaced by more purchase selectivity and the use of shopping techniques and tools discovered during the recession. Additionally, the affluent segment of Generation X and the young 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.”
According to the report, retailers need to make promotion and savings-related information more easily accessible across all shopper touch points. Furthermore, the explosion of online resources and new mobile phone shopping apps has made it easier than ever for consumers to find a specific item. This makes it imperative for retailers and manufacturers to optimize their search engine and paid search vehicle activities.
Era of Pragmatic Consumption Remains
In assessing the new shopping environment, the report emphasizes that although shoppers will retain some of their 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.
Research findings included in The New Consumer Behavior Paradigm indicate that one-fifth of consumers will continue to forgo buying items that seem too expensive, resulting in a contraction for 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.”
Generation X and Y to Fuel Post Recession Recovery
In the past two recessions, Baby Boomers quickly led the recovery. However, this group has been hit hard by the recession at a point in life when their financial commitments loom large and retirement is on the horizon. Marketers will need to look to the smaller Gen X generation and large Gen Y population to fuel growth in the initial stages of the post-recession recovery. Among Gen X, one segment that will have a meaningful positive impact on spending is “up-market affluents” given their life stage needs and above-average spending potential.
A higher proportion of Gen Y’s income is discretionary as a result of fewer debts and a less-urgent need to accumulate wealth in the immediate term relative to older shoppers. Furthermore, as this generation is accustomed to instant gratification and demands the latest gadgets, spending on technology stapleslike MP3 players and smart phoneswill remain a priority and create unique opportunities for tech-oriented retailers.
Feigen Dugal added, “Retailers and suppliers must realize that there will not be a wholesale return to previous shopping patterns and behaviors. To succeed during the recovery, they will need to recognize that some shopper segments will still be in a ‘recession’ shopping mode. They must make sure consumer wants are aligned with the marketplace and turn more ‘need to have’ desires into the ‘must have’ needs of Gen X and Gen Y shoppers.”
Source: Kantar Retail and PricewaterhouseCoopers
