Consider this counterintuitive economic event: Currently, new cars can be cheaper than used cars of the same model. According to edmunds.com: "... Deals on some new cars are so generous that they actually make the new car less expensive than the year-old version of the same model."
The recession is manifesting itself in all manner of ways we may not have originally envisaged. cnn reports condom sales and the demand for vasectomies are on the increase, as couples strive to ensure their families don't unexpectedly increase in size in these hard-pressed times. At the other end of the spectrum, cultural forecaster The Cassandra Report indicates that Gen Y and Gen X trendsetters who view themselves as fashionistas may become recessionistas: "They are spending differently, with new pride in bargain hunting and [a] measure of shame in overspending."
To enhance our own insights of the recession's impact, Universal McCann has conducted the first two of a series of regular surveys, one in November 2008 and the other in March of this year. The sample for each was 2,000 adults to uncover consumers' reactions to the recession. Three words surfaced above all the others when we asked respondents to describe how they felt: cautious, worried, careful. At least 50 percent of respondents agreed to one or more of these words. And 20 percent agreed with even more pessimistic adjectives: gloomy, negative and confused.
While our survey results largely reflect the general trend seen in the economic downturn, an important difference among Under 35s versus all other ages groups has emerged, regardless of their income levels. Under 35s appear largely recession-resilient. Despite the recession, they intend to spend more across all income categories. Sixty percent of Under 35s claim that finances might be tight, but it is still important to "get out and have fun." The only other age group at a comparable level of recessionary resilience is 55+ who earn more than $100K a year - but this was at a more muted level. Perhaps lack of experience of living through a comparable period of economic instability partially explains younger consumers' buoyant attitudes to their spending, and our latest results do confirm that they are starting to acknowledge that the recession is affecting them.
Of course, just because consumers assert they will pursue a certain course of action, there is little guarantee they will actually do it. As Gerald Zaltman noted in his book, How Customers Think, intention to buy is often a poor proxy of actual purchase. I have found that while the metric intention to buy is a relatively robust predictor of real-world behavior of low cost items, such as going to see a particular movie, at best it provides capricious forecasts for higher cost items, such as cars.
Consequently, we wanted to validate various survey findings. Our largest significant finding was that shopping mall visits would be hit, as 58 percent of consumers claimed they would spend less time visiting the shopping venues. According to the retail industry's monitor, ShopperTrak, mall traffic was down 13 percent for January and 10 percent for February 2009.
Importantly, our surveys have some crucial implications for media, where we see an increasing polarization between essential and discretionary media spending across media platforms. The upshot is digital and mobile should win the day. The Internet and cell phones have become lifestyle essentials - 45 percent of consumers are unwilling to give up the Internet and, similarly, 29 percent won't give up cell phones. Indeed, the Internet may yet turn out to be an instrument for leveraging cost reduction, since 43 percent agree that they plan to shop on the Internet more because "that is where the bargains are."
Conversely, for traditional media, magazines appear to be the most vulnerable - 21 percent say they would be the first item cut from a budget, with newspapers next in line at 9 percent. Is this an opportunity for print to accelerate the development of their online propositions?
Recession is possibly the greatest "re" word that we all dread. But just as resale car prices might hold surprises for us versus new ones, arguably the recession may present an opportunity for consumers at large. The last decade increasingly looks like the decade of "me," especially for the mega-rich. Perhaps the upcoming decade, instead of being one for "me," can be one for "re" - where "re" denotes an upcoming decade to reconstruct, rebuild, recycle, renovate, remodel and reinforce the values and benefits in everything we already hold true and cherish.