Consumer spending changes could be permanent

Growing optimism among Americans and a shift in consumer shopping behavior from “Why not?” to “Why,” are noted in three recently released studies of American reaction to the recession.

New York-based Deutsch, a marketing consulting agency, reported that its survey discovered a “tidal shift from Conspicuous Consumption to Conscious Consumption. Consumers are spending less, but more importantly, they are spending smarter. After years of spending freely, they are paying closer attention, checking receipts, clipping coupons and questioning every purchase.”

The report also found that conservative spending behavior by consumers results from a consumer focus on the economy, environment and health.

“These ‘new grooves’ of behavior will not go away when the economy turns, but will instead become habitual,” Deutsch noted in its press release.

Deutsch also reports that a majority of consumers it surveyed felt “an odd sense of relief that the consumerism binge is over,” with some respondents optimistic that the new conservative approach to spending will be good for the country.

Deutsch listed four new rules of consumer behavior that retailers and consumer products manufacturers should know:
• From Value to Lasting Value: Products must last; experiences must be memorable
• From "Why Not?" to "Why?": Rational purchasing replaces impulse buying
• From "Try" to "Tried and True": Consumers won’t risk dollars on the unknown
• From "Me" to "We": Less focus on consuming, more focus on community and family; people are sharing everything from DVDs to meals and coupons

CONSUMER OPTIMISM
Results from a Northwestern Mutual study, "The American Reality Study,” indicate a “clear pattern of optimism” among Americans with most realistic about their financial challenges but confident of their chances at success.

“What we’re seeing very clearly from this research is that the ‘personal balance sheet’ is considered the primary yardstick for success,” said Greg Oberland, Northwestern Mutual executive vice president of insurance and technology. “The go-go days of materialism are over. Even the classic image of the American Dream – a home of one’s own with a white picket fence – is outdated.”

Participants in the study were asked to select the 10 attributes that best fit their definition of “success.” Topping the list were immaterial measures, such as “spending quality time with family” (88%), “having a good relationship with your spouse or partner” (86%), “being healthy” (81%); “having a good work/life balance” (80%); and “being a good parent” (77%).

Material measures of success ranked among the bottom ten responses, including “owning the home of your dreams” (31%), “earning a high income” (22%), and “having nice belongings” (13%).

Other findings of the study include:
• Only one in eight respondents (12%) feel very or extremely secure in their finances; and more than four in ten (44%) feel unprepared for the future.

• More than four in ten respondents report that they expect to spend less (41%) and increase their savings (42%) beginning in 2009.

• Only 19% of respondents expect their level of financial security to decline in 2009, and 65% believe that they will eventually get to where they want to be in life.

“It appears that Americans are addressing the serious financial challenges they’re facing more realistically now than perhaps they did prior to the global economic crisis,” Oberland said. “We were encouraged to see that people plan to save more, and are placing a greater priority on achieving financial security for the future.”

CONSUMER CONCERNS
Possibly one reason consumers intend to save more is to help with health care costs.

A recent survey by Harris Interactive found that 48% of those surveyed are “very to extremely worried” about having to pay more for health care or health insurance. The majority of U.S. adults are worried (65% somewhat, very, extremely) about being able to afford medical care and prescription medications. The 18-34 year old age group is least worried (54%), while the 45-54 year old age group is most worried (76%).

Also, one-third (34%) did not see a dentist although they needed dental care, close to one-third (28%) had a medical problem but did not visit a doctor, and one-fifth (22%) did not fill a prescription.

The Harris Interactive®/HealthDay Poll was conducted online within the U.S. between Feb. 25 and 27, 2009, among a national cross section of 2,078 adults age 18 and over.