Davis ThinkingAmong the signs that marketers are feeling somewhat better about the economy is an increase in advertising by airlines, an industry that is particularly vulnerable to the ebbs and flows of consumer spending.
At the height of the Great Recession we set off across America in search of stories of hope. We were armed with data from Young & Rubicam's BrandAsset Valuator that showed how most people were thinking, feeling and spending in new ways. We traveled through nine red and blue states, talking with people across kitchen counters, in restaurants, supermarkets, factory floors and boardrooms. In the hipster enclaves of Brooklyn and the techno hubs on the West Coast we found ample evidence that economic pain had moved vast numbers of people to reconsider their values and priorities. In these places, thoughtful spending and a commitment to sustainability, environmentalism and community had replaced consumerism. In fact, in 2007 -- even before the crisis -- our data showed Americans were becoming uneasy with debt and excess spending, distrustful of leaders and skeptical of materialist values.
Did you cut costs during the recession? Thankfully, no one was standing in bread lines or rationing goods, but maybe you refinanced your mortgage as rates dropped. Or you canceled that premium channel you never watch, drove to work a little less, packed a lunch you used to pick up at the Subway near the office or cut back on entertainment spending. If so, you might not be alone. 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.
Americans are spending more on electronics like iPads and flat-screen televisions and less on durable goods like furniture, washing machines and lawn mowers, according to government data released Tuesday. The shift reflects a change in priorities for American consumers. After pouring money into all aspects of their homes during the previous decade, consumers are redirecting their purchases to eye-grabbing technology and socking away more of what's left over into savings. Apparel company executives are worried the lure of electronics will eat into their sales as the back-to-school season gets under way.
Consumer spending and personal incomes were flat in June, according to government statistics released on Tuesday, the latest indication that the economy would continue to struggle in the second half of the year. The Commerce Department figures, which were seasonally adjusted, showed that personal income was steady in June, compared with a slight 0.3 percent rise in May. It was the lowest level this year and the first time in nearly a year that personal incomes have not risen compared with previous months.
Despite all kinds of mixed economic tea leaves, a new study of consumer perception from Deloitte indicates that most Americans do believe financial recovery has arrived, and that view is especially strong among affluents. "Consumer confidence is really strengthening," Scott Erickson, a partner in the firm's retail practice, tells Marketing Daily. "And people with higher incomes are more likely to believe we are in recovery."
American consumers are finally coming out of hiding. After months of penny-pinching amid the recession, new figures — showing an improving job market, rising factory output and increased retail sales — suggest that consumers are no longer restricting their budgets to necessities like food and medicine. They are starting to buy clothes, jewelry and even cars again.
What's the biggest emerging market of them all? I'll give you a hint: The answer isn't geographic but demographic. The answer is...women. Women leaders are the new power behind the global economy, proclaims Deloitte Touche Tohmatsu's announcement of its second annual webcast celebrating International Women's Day. In developing nations, women's earned income is growing at 8.1 percent, compared to 5.8 percent for men. Globally, women control nearly $12 trillion of the $18 trillion total overall consumer spending, a figure predicted to rise to $15 trillion by 2014. More significant, the majority of tertiary degrees are now being awarded to women. Highly qualified, well-educated and ambitious, these women are taking over the talent pool from Delhi to Dubai and bringing new urgency to the issue of managing diversity.
Don't look to Baby Boomers to lead the way in consumer spending in the months ahead. A new report from PricewaterhouseCoopers LLP and Retail Forward, owned by Kantar Retail, says that this recovery -- unlike those in last few decades -- will be shaped by the values of tech-loving Gen Y, and to a lesser degree, affluent members of Gen X.
Nike reported better-than-expected second-quarter earnings Thursday as cost-cutting and a steadier order book helped offset weak sales in mature markets, and its shares rose more than 3 percent. Nike has countered declines in consumer spending mainly by cutting costs, streamlining operations and reducing marketing. It has slashed 5 percent of its global workforce, or some 1,750 jobs. Orders for goods to be delivered from now until April fell 1 percent on a constant currency basis. That was better than some analysts had expected and an improvement from a 4 percent decline in the first quarter.
U.S. retail sales rose in November nearly twice as much as expected, making a broad-based increase that suggested consumers were buying aggressively and supporting the economy in the holiday shopping season. Retail sales rose 1.3% last month, the Commerce Department said Friday. Wall Street had predicted a 0.7% increase.
Gap stores in across Vancouver have introduced a new type of loyalty program for their shoppers called Sprize. To participate, create an account, and shop at participating Gap stores. After 45 days, if the price on your items have changed, they’ll credit the difference to your account. This time-shifts the need for wait for sales and minimizes customer hesitation to spend money, because they are guaranteed savings if it happens.
The "new normal" — the idea that when income, credit and confidence return, Americans will not return to our free-spending ways — is an idea on the march, recruiting everyone from PIMCO CEO Mohamed El-Erian to Wal-Mart CEO Mike Duke. It's spreading so fast it threatens to become the new orthodoxy. I believe the argument is flawed.
By all standard economic indicators, it appears that the U.S. is finally emerging from the worst recession in several decades. Even consumers have begun, albeit timidly, to venture out, shopping for non-essential items. So, it was fitting that the theme of this year's Idea Conference, presented by Creativity and Advertising Age, last Thursday focused on reinvention across a number of industries, e.g., automotive, technology, financial services, art, design, food, music. The notion of re-invention -- the act of making as if for the first time something already invented whether in a different form or reviving -- is no new concept to marketers. There is a never-ending list of new, reformulated products or services. But, the roster of presenters, for the most part, were unique in how they re-invented or re-imagined their products, during a particularly difficult economic time.
Women ages 20 to 30 represent a $54 billion marketing opportunity for packaged goods companies, but their needs and values are vastly different from the generation before them, a new report from Information Resources found. “Winning with Millennial Women Shoppers” outlines this growing consumer demographic’s key behaviors. Compared to the preceding generation, women born between 1979 and 1989 tend to shop less, buy more during each trip, and frequent supercenters and Walmart more. The economy has also forced these shoppers to cut back on indulgent food categories like frozen poultry, chewing gum, salty snacks and frozen pizza, the report said.
General business strategy dictates that there are two ways a business responds to a dramatic downturn in consumer spending. They cut costs and/or discount heavily to drive traffic and lure beaten consumers out of their malaise. Both approaches are easy levers to pull because they have a salient short-term impact. The rub lies in not knowing what the long-term impact of these short-term decisions will be. While the long-term implications of cost-cutting is an article in itself, today many retailers find that their most immediate issue is working their way back out of discount-driven brand-price erosion.
The recession may be over but companies that cater to consumers believe people are digging in for a long, frugal winter. That's why Clorox Co. is keeping the price steady on a new improved trash bag that grips the top of the garbage can. Clorox says it wants to highlight the bags' "greater value." Similarly, Campbell Soup Co. recently reduced the promoted price of its V8 beverages in some markets to 2 for $5 from 2 for $6. Burger King Holdings Inc. is selling double cheeseburgers for just a dollar. Glimmers of recovery in housing starts, manufacturing and auto sales have yet to reassure many consumers who are spooked by 10.2% unemployment, determined to save more and skeptical of sunny forecasts. The Conference Board recently said its consumer confidence index fell almost six points in October from September.
Signs of an improving economy might be in your kitchen or bathroom cupboards. Consumers are showing a willingness to pay a little more to get Colgate toothpaste, Kellogg's Frosted Flakes and Gillette Fusion shavers. That's good news for the economy and the multibillion-dollar companies that make those products and have been battling to keep shoppers from trading down to store brands to save money. Procter & Gamble Co., Colgate-Palmolive Co. and Kellogg Co. all gave upbeat earnings reports and even stronger outlooks for next year on Thursday, a day that also saw the announcement that U.S. gross domestic product rose for the first time in a year.
Global consumer confidence is rebounding, and in the United States has risen for the first time since 2007, amid signs the world economy is picking up although spending is still restrained, a survey showed on Wednesday. Confidence was highest in India, followed by Indonesia and Norway, and was weakest in Japan, Latvia, Portugal and South Korea, although in Korea it had improved markedly, according to a quarterly survey by The Nielsen Company, conducted between September 28 and October 16.
Halloween may conjure up visions of shrieking kids in princess and skeleton costumes trick-or-treating door to door. But this popular holiday increasingly has morphed into a celebration by adults who buy a Dracula or sexy showgirl outfit and head to a party or club. The shift has accelerated over the past five to 10 years, ushering in a transformation in the Halloween industry, according to retail industry analysts and executives. More costume sales are going to adults, with some retailers saying the percentage of adult sales exceeds 50 percent. Nightclubs, restaurants and bars are throwing more Halloween parties and events.
While much has been made of America's newfound thriftiness, a new study suggests that shoppers are less focused on price than most marketers think. "Marketers are very focused on the word value, but have very little sense of what that actually means to consumers," says Jarrett Paschel, VP at The Hartman Group, tells Marketing Daily. "Everyone assumes it must be something about the way consumers are trying to save money. But that doesn't mean we've entered a new era of frugality."
John Gerzema says there's an upside to the recent financial crisis -- the opportunity for positive change. Speaking at TEDxKC, he identifies four major cultural shifts driving new consumer behavior and shows how businesses are evolving to connect with thoughtful spending.
As the economy shows signs of a recovery, marketers are wondering if consumers will revert to pre-recessionary behavior. Consumers are trying to figure that out too. Many people are reevaluating their spending because they never again want to feel as vulnerable as they have over the past 12 months. But our society is contending with another significant change. For many people, the new determining factor for success is no longer pure profitability, but responsibility. That shift in perspective takes the form of a simple question: Am I doing the right thing--for my family, our nation, the planet?
Fear and savings are up. Consumer confidence teeters. We turn on the TV and hear media talk of the shame of the luxury goods buyer hiding newly purchased high-end extravagances in discount store shopping bags. If marketers looked closer and listened harder, they would realize that something else is afoot: Frugality is not antithetical with luxury. Let me explain.
Heather Hernandez walked into a supermarket with a stack of coupons last month and walked out with $160 worth of groceries, for which she paid $30. “With the economy right now everyone wants to make their dollars go further,” said Ms. Hernandez, a stay-at-home mother in Houston who clips and files coupons with the meticulousness of an accountant. “I see all kinds of people using coupons. I see teenagers using coupons. I see grandfathers using coupons.” It may be the digital age, but when it comes to pinching pennies, most consumers are opting for a method that is well over a 100 years old: the paper coupon.
In these tight times, teen-clothing retailers are focusing on their core clientele: moms. Aeropostale Inc. is designing new stores with wider aisles to accommodate parents with strollers and more seats to keep them in the store longer. Aeropostale staff also is exhorted to "TTM," or target the mom. Buckle Inc. is offering personal-shopping appointments outside of store hours to work around parents' schedules. Old Navy is slanting its assortment to stress value as much as glamour. "You need to make that mom feel comfortable, because ultimately she's writing the check," says Richard Jaffe, managing director of apparel and softlines retail at brokerage firm Stifel Nicolaus & Co. "She is the one who is responding to the economic uncertainty, the employment uncertainty."
In this new era of frugality, well-to-do shoppers have gone into hiding and stowed away their splashy logos. But they may hold the key to a consumer recovery. Affluent shoppers are the most important segment of consumer spending, which in turn drives the national economy. The top 20 percent of the nation's households -- with income of at least $150,000 -- account for 40 percent of all spending, according to government data. That makes them a crucial spoke to any turnaround.
While the state of the economy is having a negative effect on most areas of the retail sector, more than a few industries are experiencing an uptick. Time examines recent trends in consumer spending, discovering that products and services that fulfill needs like escapism, inexpensive luxury and stress relief are reaping the most benefits.
The economy and environment are causing U.S. car buyers to adopt European values: They will buy gas misers and keep them longer.
With American consumers reluctant to pry open their wallets for retail spending, a greater percentage plan to spend more at longtime discount giant Walmart than at Target, a new survey finds.
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