Just how much financial trauma is required to permanently affect how consumers shop? That is a question that both retailers and brand marketers are asking as the country begins what most expect to be a slow climb out of the worst recession in U.S. history dating back to the 1930's.
There's no doubt that the downturn, which began back in 2007, has made a change in a variety of areas in the lives of Americans. As the latest Retail:Next study from Dechert-Hampe and RetailWire, Fad or Trend?: Will Recessionary Shopping Behavior Continue?, points out, retailing professionals believe consumers have made a number of shorter-term adjustments in their daily lives. These include eating out less (73.6 percent), buying fewer new clothes (73.1 percent), vacationing closer to home (72.2 percent), purchasing American-made goods, (70.2 percent) and buying fewer luxury goods (56.6 percent).
"The American consumer in particular is not good at doing with less of anything," said Ray Jones, Dechert-Hampe's managing director, in a RetailWire webinar last week. "We're not very good at being frugal, like the Greatest Generation."
Some other changes that Americans have made are more likely to stick, according to survey respondents. Among these is a trend to staying connected with others through social media. More than 83 percent see this phenomenon outlasting the recession and most of those see it as a permanent change in the way Americans communicate with one another. Just over 80 percent think buying fuel efficient autos is here to stay and 72.3 percent (get out the smelling salts) are looking for children to be living longer at home before going out on their own. It looks as though all those folks looking forward to becoming empty nesters may need to wait a bit longer.
One trend that promises to stick with the aid of technology is the quest for value and the best deals out there. Over 72 percent see comparison-shopping becoming standard practice for many, with 60.7 percent seeing the desire to save as a trend that will benefit discount stores.
Consumers will increasingly turn to discounters of all sizes and types as they hold retailers' feet to the fire on the value of service. Nearly 80 percent of respondents see consumers renting low-priced videos from kiosks such as those offered by Redbox rather than going to video stores. Nearly 59 percent believe that consumers will make longer-term shifts to buying coffee at McDonald's rather than paying $3+ for a drink at Starbucks. In consumer electronics and toys, discounters are seen as taking business away from specialty outlets such as Toys "R" Us and Best Buy.
With health costs continuing to rise under the current system in the U.S., more than two-thirds see lower-cost alternatives offered at retail (i.e., in-store clinics) continuing to grow.
A number of behaviors that predated the recession, such as the trend toward store brands, have accelerated and are likely to continue to grow in the years to come, according to the study's authors. However, Ben Ball, senior VP at Dechert-Hampe, makes the distinction between buying "cheaper stuff" and quality private label.
"People buying a product just because it's cheaper and not because they perceive it's offering a better value - which I believe the store brands have been doing a great job of over the last few years - that's going to change as soon as people can [afford to]," said Mr. Ball.
D'Anna Hawthorne, strategy director for MillerZell, agrees, saying "trading down to lower cost alternatives is more related to circumstances." With the new emphasis on value by retailers, "We're seeing that, in-store, retailers are investing more in promoting their brands." She cited Publix Super Markets whose brand has "become very strong...very easily identifiable and is perceived as a high quality option" by their shoppers.
Discussion Questions: How do you see the consumer trends that are carrying over post-recession changing the retail landscape? How will they affect the way retailers manage the in-store experience?