Changes in Consumer Spending

The times are a'changin', maybe for good. From RBR.com:

Are consumers downshifting for good?

Two studies came out this past week in bang-bang succession. They go beyond the observation that consumers are cutting back on expenditures in the face of economic stress and uncertainty. In fact, they suggest that some of these changes may be permanent.

The Pew Research Center measured a number of categories for a chart called “Belt-Tightening in Bad Times.” Here’s a look:

* 57% bought less expensive brands or went to discount stores

* 28% cut back on alcohol and/or cigarettes

* 24% reduced or cancelled CATV or satellite TV subscriptions

* 22% reduced or cancelled a cell phone plan

* 21% made plans to plant a vegetable garden

* 20% took over yard work/repairs formerly contracted out

* 16% sold items in garage sale or over internet

* 10% had a friend or relative move in

* 2% rented room to a boarder

Pew noted that the shifts have come “across-the-board, among adults in all income groups and economic circumstances -- perhaps suggesting that consumer reaction to the recession is being driven by specific personal economic hardships as well as by a more pervasive new creed of thrift that has taken hold both among those who've been personally affected and those who haven't.”

This is completely backed up by a Gallup poll, which finds that almost a third of all Americans – 32% -- say that not only they have been spending less over the past few months, that it has become their “new normal.” Another 21% are spending less in reaction to current economic conditions, but say the cutback is only temporary.

Only 17% are spending more, with 6% calling it their new normal and the rest saying it’s temporary, and 30% are still applying the same spending habits.

It spills over into saving habits as well. 27% are saving more and call it the “new normal,” while 9% are saving more on a temporary basis.

31% are saving at the same rate and 32% are saving less, 22% on a temporary basis.

RBR/TVBR observation: We remember our grandmother, who was born in 1900 and lived to the ripe old age of 91. She lived through an amazing century, which included the Great Depression, and the lessons of that event never left her. Thrift was the name of the game – we don’t remember how many times we were asked if we really needed to have a lamp turned on, because electricity costs money.


What purveyors of goods and services need to come to grips with is the fact that bells and whistles are out and thrift is in, and adjust their strategies accordingly. And then advertise that fact as forcefully and effectively as possible.

Because the businesses that successfully education consumers to make their business a habit are the ones that are going to win.

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