The wave of hyper-consumerism that propelled the U.S. economy through the last decades of the 20th century and into the first years of the 21st century has passed. Say good-bye to all the signs of easy wealth we knew from the recent past: McMansions, SUVs, and recreational shopping. Consumer spending patterns are changing as part of a trend that has been quietly gathering strength over the past 10 years. Say hello to a lifestyle more focused on community, connection, quality, and creativity. People are returning to old-fashioned values to build new lives of purpose and connection. They also realize that how they spend their money is a form of power, and are moving from mindless consumption to mindful consumption, increasingly taking care to purchase goods and services from sellers that meet their standards and reflect their values.
This change in consumer attitudes — visible not only in the U.S. but also in other countries affected by the Great Recession — is not a fad or whim. It is, in part, a reaction to economic hard times. But it is also closely related to the civic dissatisfaction that is rocking the political establishment, and additionally has some roots in environmental awareness and changing aspirations. That is why this Spend Shift movement, as we call it, is here to stay. It will create opportunities for businesses that heed its message, and penalize those that do not.
Our view of the Spend Shift is based on two years of gathering and analyzing data, and traveling the country to discover how the recession has affected people’s lives. We started with Young & Rubicam’s BrandAsset Valuator (BAV), which is a poll of consumer values, attitudes, and shopping behaviors that goes back nearly 20 years. (Although the data sample we focus on in this article is from the United States, we found that there are similar dynamics in Europe and other industrialized countries.) The BAV holds data on more than 40,000 brands in more than 50 countries, and every quarter it is supplemented with new results — on purchasing and social attitudes — from 16,000 respondents in the U.S. alone. In all, we have queried more than a million consumers in 50 countries on more than 70 brand metrics, which include the general awareness consumers have of a brand, the particular ways it makes them feel, and many other metrics. (See “The Trouble with Brands,” by John Gerzema and Ed Lebar,s+b, Summer 2009.)
The BAV data revealed that even before the recession took hold in mid-2008, there were dramatic shifts in what people expected in the consumer marketplace and how they defined and pursued what they considered the good life. As a factor in decision making, sheer desire for the goods themselves has been declining sharply for the past decade. More recently, the BAV surveys show sharp increases in the number of consumers who want positive relationships with marketplace vendors and who focus more on corporate behavior. Between 2005 and 2009, a growing number of people rejected status-driven values such as snobbishness and exclusivity, and embraced attributes related to bringing people closer together or making the world a better place. Among the once-prized brand attributes that declined in this period were:
- “exclusive” (down 60 percent)
- “arrogant” (down 41 percent)
- “sensuous” (down 30 percent)
- “daring” (down 20 percent)
On the opposite side of the scale, the brand attributes Americans found more important as they began to sense the impending recession and then suffered through the crisis were:
- “kindness and empathy” (up 391 percent)
- “friendly” (up 148 percent)
- “high-quality” (up 124 percent)
- “socially responsible” (up 63 percent).
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COMMENTARY: Brand marketer's should take note of the brand attributes Americans found important and those attributes that are less important post-Great Recession.
Technological, cultural and generational factors have also played a key role in Spend Shifts in consumer attitude, namely:
- Social networks like Facebook and Twitter have quickly become popular with consumers, and there has been a race by brands to have a social network presence and social marketing strategy in place, albeit still rather slowly as I have pointed out in previous blog posts.
- Technology has played a key role in changing consumer attitudes. The Internet has quickly replaced traditional media channels like print, radio and television. Some consumer's sopend more time online than they do reading books, newspaper and magazines or watching television. Brand marketer's are ever so slowly shifting their ad spending from traditional to online (social networks, SEO, online video, social games, blogs, etc.). Faster broadband speeds have accelerated Internet penetration. Everything seems to have gone digital (HDTV, music, video, music and images). There has been an explosion in digital mobile communications and entertainment devices (mobile phones, tablet computers, netbooks, laptops, portable music and video players). The majority of connected consumers use the Internet for their news, entertainment and information, particularly products and promotional offers.
- America is undergoing generational changes as our population is becoming olders. Baby Boomers are retiring, living on social security and buying less of what they did when they were young. They now spend more on health care products, medical care, print media (books, magazines and newspapers) and nostalgic products. Teens, Generation Y and Generation X have driven much of the growth in Internet penetration and adoption of digital mobile devices. The younger generation is more interested in social causes and environmental issues, family values and consider social networks instruments for change and a platform for spreading word-of-mouth virally, through videos and sites like Facebook and Twitter. Generation Y and X both value self-sustainability, mistrust government and big corporations, and unlike their parents and grand parents, believe that social security is a thing of the past. Generation X want less hype and more facts. Both Gen X and Y are skeptical and often mistrust advertisements.
- Consumer's want more convenience and for quite a while consumer packaged goods producers have designed their products for greater convenience and ease-of-use leading to the development of microwave foods, mass market retailer's like Wal-Mart where you can literally buy everything under one roof, easy poor
Consumer frugality is the all encompassing word that best describes today's consumer. They are more price-to-value oriented, and always looking for a good deal. They want both good quality at a good price. Consumer frugality is the driving force behind mass retail discount chains, dollar stores, DIY stores like Home Depot and Office Depot, discount coupons (both printed and digital) and social group buying sites like Groupon.
American's have also become a "credit card" society. Today's consumer carry too much debt (nearly $10,000 on average), and as a result of the Great Recession and unemployment, have either curtailed purchasing expensive products, declared bankruptcy or negotiated adjustments in both their mortgage credit cards balances and payments.
Courtesy of an article dated November 29, 2010 appearing in Strategy+Business