Do you generally agree with Andrew Benett’s view of the evolving “mindful” consumer? If so, what do you think of Mr. Benett’s choices? If not, which public figures best represent today’s consumer mentality?

It’s ludicrous, all right. As I just wrote to a client who requested my analysis of the recent NY Times article, “Will It Make You Happy?” there is a difference between voluntary simplicity and involuntary penury!These examples are proof only that it can be expensive to live the simple life!Not all of the acquisition that goes on during the “good times” is wasteful spending; quite the contrary — for a lot of people that “stuff” is their first stuff, and their spending and consuming is sustaining a lot of production, trade, jobs, income, taxes, wealth accumulation, etc. General prosperity is a good thing, I believe!One of my presentation titles is “We Shopped Till We Dropped, Now We’ll Save to the Grave,” but I conclude with the point of the wealth effect: once consumers start feeling they are again getting wealthier rather than poorer, they spend. On the other hand, if this is the new normal, it seems a little bit poorer for all of us.

Filed Under Consumer Behavior

Do you see evidence that consumers are getting tired of cutting back and are looking, in varying degrees, to open up the purse strings a little bit? Where do you see opportunities for retailers at this time?

If there is one iron-clad rule when it comes to the life cycle of recessions, it is that when things get cheap enough, buyers appear.

In other words, there is a bottom somewhere, if for no other reason than even after the worst disaster, survivors must move ahead with their lives. And we all have to buy the basic staples (even the bare necessities add up to billions of dollars in expenditures).

Will we completely change our lifestyles, living in smaller places, driving smaller cars, consuming less, become more frugal, less ostentatious, opting for voluntary simplicity, etc.? Fugetaboutit. I get asked about this during every downturn and I always say the same: only those who already have everything seem to buy into the notion of doing with less. And, as it turns out, they have to spend freely in order to impress themselves that they are living frugally.

What about consumers and consumer spending, such an important component of economic activity? Optimists point out that most people (upwards of 90%) are still working, earning, making their mortgage and credit card payments–and spending, if at a less frenetic pace. Pessimists see the credit contagion as spreading. They point to devastated domestic balance sheets, due to collapsing home values, declining net worth and reduced financial spending power.

I can here offer some personal and professional insight, from my long association with the Institute for Business Cycle Analysis: our own US Consumer Demand Index, the only monthly survey of American consumers which measures actual buying intentions (as opposed to sentiment, confidence or opinion, all of which are of course subjective). We query over 1,000 households a month on their specific spending plans across a broad range of durable and non-durable goods. We don’t ask their opinion of which direction the country is going, or on how good a job they think the President is doing. We ask them, are you, or are you not, in the next three months, going to be buying a car, PC or TV, white goods, home furnishings, kitchenware, toys, etc. In the case of food/groceries and clothing/shoes, we ask whether they are going to be purchasing more, less or the same amount as in the corresponding period of last year. Regarding those durable goods, we also ask, uniquely, if their household has no plans to be buying anything in those categories during the next three months. This gives us some unique insight into real consumer behavior.

Our March data show a fairly strong upturn (from a very depressed level of -37 to a less depressed level of -11). This is a significant improvement, but we will refrain from calling a bottom or turnaround until we see our three-month moving average in positive territory for three consecutive months. (On the basis of this March report, the three-month moving average improved only one point, from -26 to -25, so there is still a long way to go, but the positive direction and momentum is encouraging.)

[Feel free to contact me for a copy of the US CDI and subscription information (or feel free to visitwww.consumerdemand.com). Our monthly surveys, which have been conducted since February 2001, give a fairly accurate forecast of the strength and direction of the PCE (Personal Consumer Expenditures) and ISM (Institute for Supply Management) indexes 4 to 6 months ahead of official data.]

So where do I stand? I believe the tide is starting to turn–the rate of decline in most major economic indicators is clearly slowing. The forward looking stock market is well off its lows. In our latest CDI survey, the percentage of consumers declaring themselves on the sidelines decreased from the record high level of 68.4 in February to the still awful 62.2 in March (at least we’re moving in the right direction!).So is that flickering light we see the end of the tunnel or an oncoming train? Ask me in two months. I would offer a stronger opinion, but everyone in the “foreseeing” business ought to be properly humble from now on. Roger Selbert, Editor & Publisher, IntegratedRetailing.com

http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/13778

Filed Under Consumer Behavior

What has the disparity of incomes in the U.S. meant for the business of retailing? Is there room for middle of the road merchants in a country where the economic middle appears to be shrinking?

What has the disparity of incomes in the U.S. meant for the business of retailing?  Well, of course, it has meant a proliferation of high-end retailers on one end, and a proliferation of discount retailers on the other.  But is there room for middle of the road merchants in a country where the economic middle appears to be shrinking?  Of course there is.  Most consumers still consider themselves to be middle class, and still shop, buy and otherwise behave as middle-class.  But growing income inequality is real and likely to grow, driven by several unstoppable trends: the education premium, the technological skills premium, winner-take-all labor markets, assortive marital patterns, and immigration.  How can retailers respond:

http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/13318

Filed Under Consumer Behavior

How critical is the psychological component to consumer spending? Is a strong retailing environment a by-product of consumer optimism and, conversely, are periods of weak sales created by shopper pessimism?

The psychological component to consumer spending is huge, of course. The problem is that there is often a mismatch between consumers’ perceptions of their own situations and prospects (usually good, and improving), and those of the economy as a whole (often bad, and worsening). As a marketer or retailer it thus becomes your job to appeal to consumers on the basis of value, whatever the (perception) of the overall economy. There are different ways of doing this with different consumers.  http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/13058 

Filed Under Consumer Behavior

What lessons are there for developers, retailers and consumer brand marketers in the Baldwin Park experience? How quickly is acculturation taking place within Latino communities and how do marketers successfully navigate the differences in evidence in Baldwin Park?

What we see here is a clash of first, second, and third generations. You really do have to know which you are dealing with, whether as a developer or a retailer. There’s a lot of expertise here in LA, but either these guys didn’t tap into it, or were ready to rely solely on what a demographic report was telling them. They sure as heck didn’t call me!

http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/13008

Filed Under Consumer Behavior

Do you think tough times drive the entrepreneurial or creative spirit? Why or why not?

Confirming what we have been forecasting in our CDI reports throughout 2007, the US economy has not been in recession. It is weak–economic growth in 1Q2008 was 0.6%–but not collapsing. Same is true of workers’ compensation and consumer spending: up only slightly, but at least not down. In my view the worst is over; the economy and consumer spending will turn around, perhaps dramatically, by the third and fourth quarters.Of course there is uncertainty among consumers, and that is reflected in our survey of household buying intentions. Again, most telling is the large percentage of households (54%) sitting on the fence, not committing to any major purchases in the next three months, a real wait-and-see posture. (This is actually down slightly from last month, and we will allow ourselves to take that as a positive sign.)

In our view consumers are waiting for any positive sign to start greater spending again, such as a stronger stock market, or a stronger housing market. Both are indeed in the cards: there is currently $3.5 trillion sitting in money market funds and with a lot of businesses showing profits, that money will not stay on the sidelines. As for how much further housing prices can fall, consider that the US population of over 300 million will surpass 400 million within 35 years, and it becomes clear that the real question is when the next housing boom starts.

[The Consumer Demand Index (CDI) is a nationally representative monthly survey of 1,000 or more US private households that measures consumer purchasing intentions across the range of durable and non-durable goods. I’ll send a free sample issue upon request.]

http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/12932

Filed Under Consumer Behavior

Are marketers and retailers taking advantage of parents’ tendency to over-buy? Do you expect a backlash from frivolous baby products and services? How can retailers capitalize on this opportunity responsibly?

Are marketers and retailers taking advantage of parents’ tendency to over-buy? Of course; that’s their job.Do I expect a backlash? No, this has been going on for decades. I remember writing about the phenomena over 20 years ago in FutureScan (now Growth Strategies), except the unfathomable figure for raising a child then was $100,000 (as opposed to today’s $1 million).

Frivolous baby products and services? What you buy is frivolous; what I and my spouse buy are small indulgences.

How can retailers capitalize on this opportunity responsibly? The way they always have: give people what they want at a profitable price point. This is a retailing industry web site, right? And oh, by the way, integrate your sales channels.

http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/12892

Filed Under Consumer Behavior

Is the American public, marketers included, naïve and gullible when it comes to understanding the Latino consumer? If so, why? If not, why do there seem to be so many mistakes?

Gregory Rodriguez just published a book that goes even further. Its title is “Mongrels, Bastards, Orphans and Vagabonds,” a history of Mexican-American immigration. The main thesis is one of assimilation and acculturation (to a changed mainstream, to be sure), and that America itself is becoming so “mongrel” that eventually all racial, ethnic and cultural distinctions will be rendered meaningless. (I have reviewed the book for www.hispanictrending.net and for the February issue of Growth Strategies.) Rodriguez reinforces a point I have made many times over the years: English language adoption among Mexican-Americans is far more extensive than is commonly believed. Just because there are vast swaths of America where only Spanish is required to function does not mean that only Spanish is spoken among Spanish-speaking populations. How else, asks Rodriguez, could upwards of 75% of Mexican-Americans be employed in white-collar or skilled occupations?Rodriguez goes so far as to label the entire “Hispanic market” a contrivance, an “invention” of Spanish-language marketers such as Univision, who sought to convince mainstream corporations that Latinos would continue to speak Spanish no matter how many generations their families live in the United States. But that is not the case. True, Spanish is certainly not going to fade away in the regions of the country that serve as gateways to new immigrants. The sheer size and continuous nature of Hispanic immigration, the proximity of Latin America to the US, and the availability of Spanish options in media, business and government services guarantee the continued proliferation of Spanish usage in the US. But it’s not what the kids are doing: young Hispanics may be very proud of their heritage, but English is the language of that powerful assimilation machine known as American culture. Hence, the language of the future is English.According to a study conducted by researchers at the State University of New York (SUNY), English remains the language of choice among the children and grandchildren of Hispanic immigrants, despite continuing waves of migration from Latin America. In contrast to concerns from some analysts that English may be losing ground to Spanish in some parts of the United States, the study finds the majority of Hispanic Americans moving steadily toward English monolingualism. Among third-generation Hispanics, the fastest-growing segment of the US Latino population, 72% speak English exclusively.Further, the study finds that this trend has generally continued among Mexican-Americans, the country’s largest immigrant group, even during the immigration boom of the 1990s. Even for Hispanics in Los Angeles, a magnet for immigration from Latin America, the pattern of language shifts across generations remains similar to those among Hispanics nationally. The report suggests that many other researchers and analysts have underestimated the pressures of assimilation, and are missing its contemporary signs. (Hello, Samuel Huntington?)What’s behind this English preference trend? Although not generally understood or appreciated, Hispanic immigration to the US, as well as the share of the US Hispanic population that is foreign-born, both peaked years ago. Migration to the US will decrease even further after 2010, according to University of California professor Philip Martin, due to a drop in Mexico’s birthrate. Hence, the explosive growth of the US Hispanic population in the coming decades will be fueled more by natural increase (native births) than by immigration. This will speed the processes of assimilation, acculturation and English-proficiency. 

Filed Under Consumer Behavior

How are the mass affluent different from mainstream consumers? What marketing and merchandising do consumers with above average spending habits respond to best?

When you include the affluent market with the “near-affluent” and then add in the “affluent-minded,” you’re talking about nearly half the population! (well, at least 40% anyway). The point is that the expectation of quality and luxury has now become a mass phenomenon.How to reach and sell and establish loyalty among the new affluent market? I would say most of all, individualization, or in other words, mass customization. The processes and technologies that make this possible are more available and affordable than ever. It is up to retailers and providers of goods and services to equip themselves to treat every one of their customers as an individual. This will increase number and size of sales, visits, loyalty, referrals, income and profits. It is the way of the future. 

How much influence do you think social networking sites have on purchases currently? In what ways do you see social networking sites influencing consumer purchasing decisions? How might that change in the future as these sites mature and gain credibility?

I quite agree we are only at the base of a long, steep growth curve. It certainly makes sense to me, though, that as with Amazon, consumer reviews on particular and specific web sites will be more influential than social networking sites. For retailers, that means creating a online community among your customers, and giving them space on your web site for feedback and interaction, both with store personnel and with each other.

Filed Under Consumer Behavior

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