Study: Downturn Gives Rise To New Consumer Beliefs

by Sarah Mahoney, Aug 19, 2008, 5:00 AM

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While it's certainly not news that high prices and economic fears are causing consumers to cut back, a new study from Cramer-Krasselt finds that behaviors are shifting in ways few marketers may have expected.

"This downturn is like no other in generations," the agency notes in its study, "not because of its severity, but because it has given rise to a new set of consumer beliefs." It isn't just that people are frustrated (as 50% of the survey's 500 respondents are), worried (48%) or annoyed (29%). And it isn't even that the sense of financial security is so weakened, although 61% of the people polled feel less financially stable compared to a few years ago, and only 26% of people feel very secure about their financial future.

It's that the current downturn has consumers building on trends that were already gathering momentum. Take the simplicity movement. While marketers such as Circuit City, Best Buy and Phillips have been tapping into consumers' desire to streamline their possessions for several years now, the sagging economy is now providing an incentive to go one step further, with more people selling things on such sites as Craigslist and eBay. Ditto the move toward "locavorism," once favored by environmentalists, and now embraced by anyone who may be looking to save on gas.

The way Americans view their money-management options has shifted considerably. Some 62% of survey respondents say they have made some kind of sacrifice because of the economy--giving up vacations, buying private-label brands, or driving and dining out less. Only 14% say that their leisure time has not been affected. And 56% claim to be more conscious of prices on all products, while 40% say they are now shopping around for the best bargain.

Savings behavior has certainly taken a hit: Forty-seven percent say they are saving "a lot" less than they used to, 40% say they are taking money out of savings more often and 28% say they are using their credit cards more. And doubtless some of those consumers feel adrift. But just 29% say they've developed a budget and that they're sticking to it.

"Consumers are on a financial diet," the report notes, predicting that brands that can tap into these new attitudinal segments will thrive.

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