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2010: A smarter, wiser and responsibly indulgent consumer

Posted by Stephen Hahn-Griffiths on 12/16/09
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OwlBased on our studies, we anticipate the consumer will transition into recovery mode in 2010 and start spending again, but with some degree of moderation.

By contrast to the free-spending days of old, the post-apocalyptic consumer will be more savvy, responsible and prudent – although interestingly, as the year progresses, they’ll be increasingly more likely to splurge on “justifiable indulgences.”

Their spending mindset: cents and sensibility
In the wake of “The Great Recession” consumers have realized that unwieldy debt burdens and little to no savings makes them vulnerable to economic ruin. As a result they’re looking to regain control of their own financial destiny and seek out new ways to afford what they need. Their New Year’s resolution is “buy smart, or not at all.”

Shopping is a full contact sport
Consumers have upped their game when it comes to shopping strategies. They’re shopping around more – 75% of consumers state they use five or more channels just to get their grocery shopping done. Even when they are not shopping around they’re working every angle to their advantage – from trawling blogs, online search, deal aggregator websites, joining communities and seeking out e-coupons.

Culturally, looking back to the future
Consumers are regressing back to behaviors from days of old, but with new reasoning. For example, more consumers are line drying their laundry, with an eye towards saving money and justifying the environmental benefits. The victory garden has returned as a way to teach kids about healthy eating. And knitting is also back, as a way to save money and provide emotional therapy.

The oxymoron of naughty but nice
Consumers have a renewed desire for life’s little pleasures – but their resultant behavior is likely to be tempered by “devil vs. angel” psychology. They want to occasionally indulge, but need to feel guilt free in doing so. Many will happily treat themselves to a pint of Haagen Daaz (Five) knowing that it tastes great – and has reduced fat, and is also additive-free. But ostentatious indulgence is still likely to be out of bounds.

What are the implications for brands?
• Make consumers feel smart. Give them good reason.
• Create a multi-channel brand experience and make comparison shopping easier. The results might surprise you.
• Being traditional can be innovative. How can you make brand heritage feel contemporary?
• Strike up the emotional benefits of the brand and the consumer will play along.
• Indulgence is a permissible sin again – but be careful how you talk about it.

  • scottkarambis

    I've noticed it's pretty hard to generalize about spending habits since the recession is hitting different segments in disproportionate ways. Manufacturing and blue collar unemployment is closer to 20% than 10, so for these families, cutbacks are necessary and essential. The drops I've seen in spending across categories in Detroit and St. Louis are destroying businesses and it's going to take a lot more than line-drying to get these cities back on their feet. I think your points are most relevant to the middle and upper middle classes, who are adjusting their spending less out of panic than–as you suggest–a shift in values that has been accelerated by the recession. The portfolio shopping behavior you describe above has been around for awhile and is only being amplified by the economy. I agree that consumers are more attentive to waste, which includes the previous super premium edge of most categories, $400 jeans, etc. (And super premium ice-cream is also taking a hit no matter how aligned with current values and health trends) But they continue to spend on what they think of essential luxuries, especially consumer electronics and entertainment. And alcohol! And let's not forget, every single generation of the Americans–including the self congratulatory post-depression boomers–spent A LOT more not less after an economic downtown, despite what they might claim. Even this recession is unlikely to change that pattern

  • shahngriffiths

    Scott, appreciate your comments. I understand the economic and social angles of where you're coming from. But from a marketing standpoint, I guess brands need to decide if they're going to focus on the 80% of consumers with disponsable income of the 20% of consumers without. Either way, the “smarter, wiser” disposition is true to varying degrees right across the consumer spectrum. And you have to admit that most consumers have their own version of a little naughty but nice consumption behavior – even when you're working within your budget constraints.

  • scottkarambis

    I've noticed it's pretty hard to generalize about spending habits since the recession is hitting different segments in disproportionate ways. Manufacturing and blue collar unemployment is closer to 20% than 10, so for these families, cutbacks are necessary and essential. The drops I've seen in spending across categories in Detroit and St. Louis are destroying businesses and it's going to take a lot more than line-drying to get these cities back on their feet. I think your points are most relevant to the middle and upper middle classes, who are adjusting their spending less out of panic than–as you suggest–a shift in values that has been accelerated by the recession. The portfolio shopping behavior you describe above has been around for awhile and is only being amplified by the economy. I agree that consumers are more attentive to waste, which includes the previous super premium edge of most categories, $400 jeans, etc. (And super premium ice-cream is also taking a hit no matter how aligned with current values and health trends) But they continue to spend on what they think of essential luxuries, especially consumer electronics and entertainment. And alcohol! And let's not forget, every single generation of the Americans–including the self congratulatory post-depression boomers–spent A LOT more not less after an economic downtown, despite what they might claim. Even this recession is unlikely to change that pattern

  • shahngriffiths

    Scott, appreciate your comments. I understand the economic and social angles of where you're coming from. But from a marketing standpoint, I guess brands need to decide if they're going to focus on the 80% of consumers with disponsable income or the 20% of consumers without. Either way, the “smarter, wiser” disposition is true to varying degrees right across the consumer spectrum. And you have to admit that most consumers have their own version of a little naughty but nice consumption behavior – even when you're working within your budget constraints.

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