What is the New Normal?
Depictions of the "New Normal" that came out of the Great Recession often paint an apocalyptic view of retail, with hordes of coupon-clippers and other obsessed deal hunters terrorizing store aisles. When they weren’t skimping, they were — horrors — saving!
In a column for Forbes, Pam Goodfellow, consumer insights director for BIGinsight, explored whether frugal consumers are indeed the new normal and pretty much agreed with the bleak assessment. In July, BIGinsight asked 8,500 U.S. consumers if they thought the economy would ever rebound to what it was before the economic crisis. Among the respondents, 35.2 percent indicated "Yes," 32.3 percent said, "No" and 32.6 percent were "Not Sure."
"With two-thirds of Americans feeling pessimistic or indecisive about an economic rebound, we’re likely to continue to see heavy coupon usage, a strong focus on budgets, further attempts at debt reduction, targeted spending, price comparisons — smart shopping strategies executed by well-informed consumers," wrote Ms. Goodfellow, who commented that mobile devices have added another tool for discount seekers.
Ms. Goodfellow noted that back in July 2009 more than two in five were confident that the economy would bounce back to its pre-recession glory. She added, "With the economy flatlining over the past four years, optimism for a rebound has been waning among consumers."
The bleak sentiment was echoed the Food Marketing Institute’s The U.S. Grocery Shopper Trends 2012. According to the report, 16 to 20 million households have shifted into the mindset that they have to accept living with less. That’s led to grocery spending running significantly below inflation.
"Retailers must adapt to win in the ‘new normal.’ There has been a permanent shift in value-seeking behavior," said Nick Hodson, partner at Booz & Co. during a recent webinar, according to SeafoodSource.
The report likewise found that technology is heightening price transparency and making it easier to find deals. Said Mr. Hodson, "There is almost no barrier to finding the lowest price."
Among the higher-income set, standards have been lowered in terms of what constitutes a luxury and symbols of luxury have become smaller, more personal and intimate. According to a survey of ‘Affluents’ (adults living in households with at least $100,000 in annual income) by Ipsos Mendelsohn, 89 percent agreed that "when I decide to purchase a luxury item, I go out of my way to find the best price possible." Less than one in four stated that "if a luxury product goes on sale, it lessens the perception of luxury."
Fully 92 percent of Affluents agreed with the statement,"To me, small indulgences can be just as meaningful as purchasing a high-end luxury product."
- The New Normal, According to Consumers – Forbes
- Affluent Family Emerges as New Luxury Marketing Segment – Ipsos Mendelsohn
- U.S. Grocery Shopper Trends 2012 Executive Summary – Food Marketing Institute
- FMI: Retailers must adapt to ‘new normal’ – SeaFoodSource
- Affluency: New Definitions of Luxury – Advertising Age
- Survey: The Frugal ‘New Normal’ Has Become the Norm – Time
- The New Normal: From Families to Nobel Winners, It’s All About Less – Time
Discussion Questions: How do you define the new normal? What new consumer characteristics and attitudes do you see? Should retailers, as some consumers have done, lower expectations going forward?