The “Downturn Generation” emerges

One of the world’s leading consumer research companies suggests the recession is creating a “Downturn Generation” that will remain thrifty long after the economic recovers.

Chicago-based Information Resources Inc., the leading global provider of consumer and market insights for the consumer packaged goods, retail, and healthcare industries, reports that many Americans are adopting “practices similar to Depression-era shoppers, implemented both to weather the recession and to keep a close eye on spending long after the recession ends.”

The new report notes “permanently changed” consumer behaviors and categorizes the three emerging classes of consumers.

Optimists: They believe “things will get better during the next 12 months,” are spending wisely, cutting back selectively and making sacrifices as a last resort.

Maintainers: They agree that, “the economy won’t get worse, but it won’t get better either” and are also spending wisely, but are more aggressive about making cutbacks.

Pessimists: This group will identify with the direst predictions, believing “if you think times are hard now, next year will be worse” and are cutting back wherever possible and hunting tirelessly to find deals.

“Optimists, maintainers and pessimists are each weathering the recession in unique ways, but all three groups have made obvious behavioral and attitudinal changes and many admit they intend to prolong the use of their new methods,” IRI Consulting and Innovation President Thom Blischok said in a statement. “We believe the Downturn Generation will continue their current behavior patterns until they have regained confidence in the U.S. economy. Interestingly, shoppers looked for a return of ‘stability’ as a signal that the economy is pulling out of the recession, in particular, ‘stability’ across gas, food and energy prices, as well as home values.”

Other findings in the report include:
• Nearly 64% of shoppers characterize their financial condition as a little or a lot worse off than last year; approximately 30% believe their finances will be a little or a lot better one year from now.

• As many as 70% of shoppers note they have less savings than they used to, while an equally significant 71% agree they have less total wealth.

• Even though gas prices have declined as much as 50 percent from the highs of fall 2008, 73% of surveyed shoppers state rising gas prices “Impacted” or “Strongly Impacted” their financial situation during the past six months.

• In addition, 75% note rising food prices “Impacted” or “Strongly Impacted” their financial situation, even though food prices have largely leveled off or declined since summer 2008.

• More than 69% say they are more likely to look through retailer ads for deals.

• Nearly 82% are more likely to look for sale prices once in the store.

• Fifty-nine percent visit multiple stores for the lowest prices, and 42% of those shoppers will continue to do so into the future.

• Thirty percent are making bulk purchases with others not in their households to secure low unit prices, and 35% of those shoppers intend to continue doing so.

• More than 34% are collecting, sharing and trading coupons with others, with 40% of those shoppers planning to continue this behavior.

• Nearly 44% of surveyed consumers are trading their doctor for information on the Internet and half of those shoppers will use this strategy in the future.

• A significant 70% of shoppers are cutting back clothing purchases, with 56% of them noting they will do so in the future.

• Sixty percent of individuals are wearing clothing multiple times to reduce laundry costs, with half planning to continue to do so.

“We see that shoppers are altering their spending habits across all significant lifestyle categories. (Consumer packaged goods) retailers and manufacturers must plan for the continued practice of these new behaviors in order to meet consumer needs and continue to thrive in business,” Blischok noted in the statement.