While the world continues to enjoy the economic recovery, brands are facing a new world order when it comes to consumer spending habits, according to a new report from The Boston Consulting Group (BCG).
The report says that the recovery has finally arrived for mature markets, but that doesn’t mean that consumers are returning to their old pre-crisis over spending habits.
Shoppers are seeking bargains even when they don’t have to, and they are putting home and family above ostentatious luxury.
The ‘A New World Order of Consumption: Consumers in a Turbulent Recovery’ report finds that pessimism is down from peak levels in early 2009, but anxiety continues to be higher than before the downturn in many markets.
Patrick Ducasse, BCG senior partner and co-author of the report, said, “Still, the anxiety that consumers feel far outweighs their sense of personal hurt from the downturn. Reactions to the crisis were, for many, driven more by anticipation of personal economic hardship than the actual experience of it.”
To attract post-downturn consumers, BCG recommends that brands accelerate product innovation, upgrade consumer insight capabilities, de-average the go-to-market playbook to capitalize on robust areas of demand and focus on the “last three feet” by improving in-store POS and sales-force effectiveness to capture consumers in the crucial space in which they make their final purchase decisions.
Catherine Roche, a BCG partner and co-author of the report warns that brands will have to now rethink their growth expectations and develop a highly de-averaged approach.
But spending also differs by category and demographics. Products for the home, and even some luxury categories, are seeing resurgence. Among consumer segments, companies can look to women, young singles, and couples without kids as groups with the most buoyant attitudes for continued spending, the report says.
Brands much now rethink their business models and develop new scenarios for a possibly turbulent future. The BCG report outlines eight powerful shifts in attitudes and shopping patterns for brands to think about:
-Values are shifting as consumers rank home, stability, and the environment considerably higher than luxury and status.
-A bargain-hunting mindset remains in full force—consumers are somewhat less likely to defer nonessential purchases but they remain more committed than ever to shopping around for the best deals.
-Green products are still popular, but they need to demonstrate that they have economic as well as altruistic value.
-Consumers willing to spend still need a good excuse.
-Consumers remain more open to trying private labels and alternative channels (especially the Internet), and they are sticking with them.
-Cocooning—staying home—is still going strong.
-Trust in institutions, especially banks, remains bruised with the news of big bonuses on the heel of bailouts.
-Consumers are continuing to avoid big credit-card balances and heavy debt.
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