Advertisers/Marketers: In Tight Economy, Consumers Prioritize Spending

thrifty shopperWhat won't Americans do without? That's the big question, as the U.S. Bureau of Economic Analysis announced that consumer spending was down 0.2% in December--the fifth month in a row of cutting back.

Clearly, consumers can do without cars, which has left Detroit whimpering. And they are willing to do without cufflinks and handbags that cost a mortgage payment. Neiman Marcus just reported a 23.1% tumble in January sales. And while they won't swear off perfume entirely, the NPD Group reports that women are spritzing less often, redefining the number of occasions they consider scent-worthy.

A new survey for the National Retail Federation's Stores magazine finds that for most families, staying in touch is critical, as are low-level splurges. The Internet stays--with 80.9% of respondents describing that service as untouchable, along with cell phones (64.1%), cable TV (60.5%) and discount shopping for clothing (43%.) Haircuts and color are also important, with 40% describing them as inviolate. But a splurge here and there ranked fairly high, too, including the occasional fast-food meal (36.6%) and a new pair of shoes (24%.)



When asked to rate items that were most expendable, luxury was high on the list: High-end handbags (92.2%), satellite radio (90.9%), specialty shopping for apparel (90.7%), cosmetics (90.7%), maid service (90.0%) and facials (89.8%) are all on the chopping block.

But such broad surveys mask more subtle shifts in how consumers are allocating the dollars they do spend. A survey from the Global Strategy Group reports that while 46% of women and 36% of men say they spent less on clothing than they did six months ago, consumers cut back much more radically on such items as home décor, cosmetics, and consumer electronics, says Jef Pollock, president of the market research firm. And while consumers are keen to shop sales (something consumers always say, even in good times) 78% of women and 77% of men say if they really want something, they don't mind paying full price.

"One change we notice from six months ago is that the importance of brand has increased," he says, "and while it's clearly not as important as price in this environment, it really speaks to some of the emotional and pragmatic needs of shopping. One hypothesis is that people are thinking, 'If I'm going to spend less, then I want what I do buy to be high quality.' Secondarily, people are shopping more at discounters, which has likely got them thinking more about which brands are and aren't available in lower-end stores."

Pollock believes that awareness of brands can even include private-label goods, as consumers are more keenly aware of brand allegiance to stores.

In fact, some research suggests that as the recession wears on and consumers become more and more accustomed to shopping at discounters, the store-to-consumer connection is intensifying.

When asked if they could only choose one store to shop at for the rest of their lives, 22% of Americans says the winner is Walmart, reports a new poll from Zogby International, with Target following closely at 22%. Macy's came in third, with 9%, followed by Costco, 8%, and Sears, JC Penney and Kohl's all tied up at 5%.

But luxury does live on: For 2% of Americans, Zogby reports, Bloomingdale's and Neiman Marcus are the stores of a lifetime.


Next story loading loading..