Savings and the Consumer in a recession | Advantage Research

Contrary to straight and the narrow, lifestyle spending just veered away from expensive brands during the recession and never really dipped. The challenge is we are not getting any growth in the developed economies.

Here’s the latest lifestyle research/ consumer research at Adage:

In a new study, Pew Research Center asked participants about household spending since the recession began in 2007. Via telephone interviews, nearly two thirds of respondents said they had cut back on spending, and only 6% said they had increased spending. In the same survey, 54% said they thought we are still in the recession, and 63% said it will take at least three years before their families recover from the financial effects.

It will be a couple of months before the Bureau of Labor Statistics releases its 2009 data on consumer expenditures, but one of two things will happen: The Pew study will be upheld and there will be some obvious declines in consumer spending, or purchasing trends will continue to increase as they did in 2008 with the recession well in gear. That would show that, while people might want to or think they are cutting spending, in practice they’re actually spending more.

Spending growth peaked in 2005 with 6.9% growth over 2004’s average expenditure of $43,395, according to BLS data. Since then, it has dropped steadily to just 1.7% in 2008. But that was still growth. Broken down by age, only those under 25 and 35- to 44-year-olds dipped, and only by 0.2% and 0.4%, respectively. One of the age groups that really drives the economy, 45- to 54-year-olds, increased its spending a healthy 4.9%.

Luxury Goods sales did dip 20% in 2008 and 2009 and then they were the first to come back. If you try to understand the recession consumer, however, he has more extra time on his hands and seemingly less money that must last a little longer. He just spends whatever he can lay his hands on and in typical subscriptions/ regular items of foods and groceries as he thinks make his family ticket thru the bad times. His car still works fine. Her children don’t suffer. And everyone watches the same channels on Tv. Maybe that’s the lucky ticket that’s got all the global millions rooting for each other at the same time. And I am happy Indian companies are paying more taxes in the US 😀 if they employ more Indians..

Of course, businesses interested in volume sales like the model Walmart built or as is happening in all consumer categories in Australia right now, the key to the heart of the wallet and not some shavings off the top, is the deep discounts you can offer after the two months premium season for the goods is off. It is true for electronics categories, apparel categories and foods categories including the new Kraft mixes you might want to enjoy. I wonder if we can think this model for currencies also. Buy the dollars at their real value just this week…(My apologies if the weekend stuff got to you, relax, take a deep breath and get to that Mall)

Even for purchases like Insurance or for items that as a group increase Household savings, the same principles apply. New York Life actually increased market share during the recession and it is not MLM. Mid Market companies that invested in MLM have to rethink a simpler model that would intuitively be self sustaining as that model had inherent strengths during a recession.

The important things to keep in mind:

1) Brand investments are important at all times and should not overtly suffer in a recession. A droning level of noticeable brand activity esp as the social world is a really inexpensive and far reaching investment of goodwill
2) Consumers like discount, marketers like discounts and contrary to some opinion even brands like discounts. Look at McDonalds and $1 coffee, $1 breakfast with McCafes
3) Radio and outdoors have been ignored for no fault of the marketer ( okay, point taken)
4) Brand Sense, Tipping Point all say that research must start to try your instinctive hypothesis and not go by the number crunching. Go for the instinct the brand engenders
5) Sell to Moms or any special interest categories that can take charge of the cheerleading for you, Sue.(Glee, Sylvester Sue, defined as a shrew with an agenda, that only grew 😦 )


About zyakaira
Investment Banker, 40s, Bangalore This Biopic and this web recreates how one point of view, one person can impact a tremendous economic engine that the world thrives and mis-thrives on. This one has the knowledge and the civil sense , the art of conversation and some good writing to mentor others as powerful and help global managers develop and fine tune their approach on US markets, China, India and the world. Read on here, and let me know what you need. It can be a race for TRPs, a race for new markets and a race to do what is right. I have the pulse of the crisis, the recovery and the market direction and can help you build and refine your strategy as i have helped thousands of managers and multiple global corporations. Of course, it’s more fun if you talk to me. I am in favor of leading this moving of the economic crisis and will partner with you in a soft and subtle way, just the way we both ride to the top. But you can write with us, opine and just reply with aplomb and shine on Twitter , 4 square , Facebook and any other social “choupal” of choice via zyaadakairaada Profile & Portfolio - SocialPicks Different flavours at:

One Response to Savings and the Consumer in a recession | Advantage Research

  1. Pingback: Savings and the Consumer in a recession | Advantage Research (via Social Networking and New Markets) « A blog of blogs

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