October 12 2011|08.00 AM UTC

Alex Gutow

Changes in Consumers Spending

Category: Personal Finance, SRTags: , , , , , ,


Since 2008, there have been significant changes in the behavior and spending habits of American consumers. As the economic downturn lingers, analysts predict many new shopping habits – increased Internet use, decreased brand loyalty and the end of the “buy now, pay later” attitude – are now firmly entrenched in U.S. shoppers. The new “normal” means that the buying process now involves online research and the use of multiple point-of-sale incentives, such as a discounted price plus a retailer coupon.

Shift in Consumer Behavior Here to Stay

According to a report by PricewaterhouseCoopers, the economic downturn has caused enduring trends in consumer behavior that will continue, with rampant consumerism being replaced with deliberation and selective spending. Only 7% of shoppers surveyed for the report said they had made no changes whatsoever to their consumer spending habits in response to the economy compared to 34% of respondents who made significant changes to their buying habits.

A Gallup poll also reported that three in four respondents had cut back on discretionary spending like entertainment and recreation in response to the economic downturn and rising consumer prices. 49% of those surveyed bought cheaper, lower-quality goods and 46% shopped at discount stores more frequently.

Consumer Spending May Be Up, But Still Far Below 2008 Levels

Overall, daily consumer spending remains far below the levels seen in 2008. A new Gallup poll shows that self-reported spending among Americans in stores, gas stations, online, and in restaurants was about $61 a day, $45 less than the $106 daily average spent in 2008. However, in 2009, consumers reported spending about $64 a day.

Savings Trump Brand Loyalty, Vacations and Alcohol

A Pew Research Study found that 71% of Americans reported buying less expensive brands to save money during the economic downturn, 57% either cancelled or cut back on vacation plans and 30% reduced their spending on tobacco and alcohol. After the recession, consumers will likely continue to buy familiar brands, but only if they offer the desired features and price points.

Internet Shopping Has Increased

One retail sector that has experienced tremendous growth during the economic downturn has been online retailers. In a study by Booz & Company, the number of consumers shopping online for a variety of products doubled from 16% to 32% since 2009. This research also revealed that two times as many consumers now research products online, about 23%, in comparison to 11% in 2009.

The National Retail Foundation‘s magazine also reported that online mega-merchant, Amazon.com, is ranked number two on the NRF’s Hot 100 List due to Amazon’s 46.2% sales growth over the past year. (Rankings on this list are determined by increases in annual domestic sales for companies who have over $300 million in sales.)

Future Trends

Online shopping seems to be here to say with Forrester predicting that 15% of total retail sales in the U.S. will come from online purchases by 2015, representing $279 billion in gross sales. New e-commerce models that are harnessing the power of mobile Internet such as Groupon, Google Offers, and Living Social have also helped bolster the acceptance of online shopping among American consumers. As e-commerce grows, so does the likelihood that m-commerce will pick up steam and become the new shopping norm.

Share this article:
  • Digg
  • Reddit
  • del.icio.us
  • StumbleUpon
  • Facebook
  • Tipd
http://www.billshrink.com/blog/wp-content/plugins/sociofluid/images/digg_48.png http://www.billshrink.com/blog/wp-content/plugins/sociofluid/images/reddit_48.png http://www.billshrink.com/blog/wp-content/plugins/sociofluid/images/stumbleupon_48.png http://www.billshrink.com/blog/wp-content/plugins/sociofluid/images/delicious_48.png http://www.billshrink.com/blog/wp-content/plugins/sociofluid/images/google_48.png http://www.billshrink.com/blog/wp-content/plugins/sociofluid/images/yahoobuzz_48.png http://www.billshrink.com/blog/wp-content/plugins/sociofluid/images/twitter_48.png

{ 4 comments… read them below or add one }

shirleyhandy October 13, 2011 at 1:24 am

There is a new online discount sweeping the country this holiday season, called “Printapons” where a local store is featured every day with huge discount.

Reply

Belinda @ Travel Merchant Account May 8, 2012 at 10:27 am

I dare say the e-commerce is already a current trend. The percentage of online shopping activities is increasing thereby decreasing the retail stores sales.

And because of the recent adaptations of tablets and the increase number of smartphone users, a shift from e-commerce to m-commerce will have its tipping point by 2015 says analysts from Gartner Inc.

Reply

April at Albuquerque CPA July 15, 2012 at 11:33 pm

Well the economy is not pretty good and everyone wants to save a few bucks here and there. People are now more aware of credit scores, bad credit, debt collection and would always want to go for internet shopping since coupons are given out for anyone’s convenience, saving any shopper a few dollars…

Reply

Daisy@EverythingFinance August 13, 2012 at 9:02 am

These are some interesting trends, especially the one about consumers spending less on tobacco and alcohol. I guess internet shopping increases because you can find deals more readily on the internet than you can browsing malls. You can comparison shop.

Reply

Leave a Comment

Previous post:

Next post: