This is the first in a three-part report.
Due to the recent credit shocks and the rise in the price of many commodities, consumer values have seen an enormous shift. According to TNS Retail Forward ShopperScape, August 2008, consumer confidence in the economy is lowering at a massive rate, with many shoppers buying far less, and less often, than ever before. 65% of the market are buying only the necessities, while 47% are postponing all purchases. These shifts in the economy are giving birth to the conscious consumer. Consumers are reaching not only their financial limits (maxing out their credit cards, exhausting their savings) but also changing the way they shop. People are beginning to steer away from the conspicuous shopping habits of the past; they do not feel the need to drive the fastest car or live in the largest house. Instead they seek goods and services that give them a sense of personal fulfillment or a better balance in their lives.
With the economy in recession, consumers will once again learn to save. After the Depression of the 1930s, this habit of saving stayed with consumers long after the nation had bounced back. Consumers are now being pinched from all sides. From food to medicine to mortgages, many people are shifting to less-expensive products, buying less clothing, and eating out less often. These activities will affect the economy long term, shifting consumer values along with it.
For many, success is no longer measured by overconsumption. The new term affluenza is more or less a statement against overconsumption. People are looking to simplify their lives by living frugally. They are focusing on their health, spirituality, and stress reduction, as well as spending more quality time with friends and family. A new generation of people, titled YAWN (Young and Wealthy but Normal) have also entered the marketplace. These people equate frugality with morality and dedicate much of their time and wealth to charity. Many of these characteristics emerged shortly after 9/11; however, they mean even more in the present day. Companies like Dentyne® are capitalizing on these renewed values, with their Make Face Time campaign. Dentyne allows its viewers only three minutes to view their Web site, with a timer in the upper right hand corner, in which they can send a face time request to friends, enter face time contests, and view Dentyne products. After the three minutes are up, the viewer cannot return to the Web site until midnight the next day. Dentyne knows that chewing gum can’t change a person’s life, but facilitating social connections or giving you back time is more than most products have to offer.
With recent developments in the economy, consumers are looking to save their pennies. During hard times, consumers turn to value retailers, which leads to a rise in consumers shopping at thrift stores and retailers like Walmart® and Target®. As the economy recovers, some shoppers will go back to their old stores; however, many will continue shopping at the value retailers. After having tried the value stores, some consumers will like the changes they have made by switching to private-label brands. [Please see Part Two of this series for more information on Value and Private Brands.] These private brands generally offer the same quality at a lower cost. Once the economy is strong again, many shoppers will go back to their favorite stores and many will upgrade again to national brands. But we know not everyone will. How the current economy changes shopper behavior in the long-term – whether a new class of value-seekers will emerge as it did after the Great Depression – remains to be seen.
– Contributed by Audra Bickel
