And, the report notes, shoppers will be more deliberate and purposeful in their spending, as conspicuous consumption will give way to more conscious or practical consumerism. Rampant deal-seeking will be replaced by more purchase selectivity and the use of shopping techniques and tools discovered during the recession. Additionally, the affluent segment of Generation X and the young Generation Y will lead spending in the recovery.
When it comes to retirement and savings, Boomers have lost the most, which means they now have very different spending habits, according to Lisa Feigen Dugal, PricewaterhouseCoopers' U.S. retail and consumer practice advisory leader. Now it's the Gen X and Gen Y demos that have disposable income, and they spend very differently and have different ways of seeking bargains.
Among Gen Y consumers (those between 18 and 27 for this report) just 25% say the economy has significantly changed their spending behavior, while 36% of Gen Xers say it has, and 37% of Boomers say they have significantly changed shopping habits.
In the past two recessions, Baby Boomers quickly led the recovery. However, this group has been hit hard by the recession at a point in life when their financial commitments loom large and retirement is on the horizon. Marketers will need to look to the smaller Gen X generation and large Gen Y population to fuel growth in the initial stages of the post-recession recovery. Among Gen X, one segment that will have a meaningful positive impact on spending is "up-market affluents" given their life stage needs and above-average spending potential.
A higher proportion of Gen Y's income is discretionary as a result of fewer debts and a less-urgent need to accumulate wealth in the immediate term relative to older shoppers. Furthermore, as this generation is accustomed to instant gratification and demands the latest gadgets, spending on technology staples like MP3 players and smart phones will remain a priority and create unique opportunities for tech-oriented retailers.
Feigen Dugal adds "... there will not be a wholesale return to previous shopping patterns and behaviors. To succeed during the recovery, (marketers) will need to recognize that some shopper segments will still be in a 'recession' shopping mode... "
As shoppers' "wants" are steadily reintroduced into the equation, trading-down behavior related to the choice of retailer, product, or brand will lose some traction in the recovery. However, private label brands will remain a significant factor due to their increasingly higher quality and low cost, since retailers don't have to advertise or promote them to the same degree as national brands.
Findings included in study indicate that one-fifth of consumers will continue to forgo buying items that seem too expensive, resulting in a contraction for the luxury and gourmet foods markets. The emergence of a more thoughtful approach to spending on luxury and non-discretionary goods means shoppers will place a premium on goods that have qualities of timeliness, usefulness, and versatility.
Mary Brett Whitfield, senior vice president at Kantar Retail, concludes that "... retailers and suppliers can take advantage of this "frugal fatigue" and offer affordable do-it-yourself alternatives to pricier products... (shoppers) remain cognizant of today's economic realities and need to balance that with personal desires... "
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