As we start to see the end of this recession – and I know not everyone believes it is over – there is a lot of speculation about whether there is a “new normal” for consumers. The Gallup organization, for example, believes so …
[We see] a fundamental shift in the way people spend and save. Even in an improving economy, we may discover that many consumers have permanently altered their shopping habits.
There are two schools of thought on this: The first is that consumers are so shell-shocked after the last two years that their shopping habits have indeed changed. And if consumer credit stays tight, they may have no choice. Some of the comments on this older post state this case well.
The second view is that this shift is just part of the normal economic cycle: During recessions, consumers cut back on luxury purchases, for obvious reasons. But eventually things will return to “normal” once the economy improves. Our culture has not changed significantly over the past few years to make a change in how Americans view consumption.
I lean towards the latter view, and the better than expected retail sales in March seem to back that up. That said, there are some fundamental ways consumers are different now, and will be different in the future. These changes are not completely related to the recession, but it has perhaps given them additional steam:
– More informed, choosy, comparison-shopping consumers. (This has been talked about for at least as long as I’ve been doing this. But it’s more prevalent than ever.)
– More cyber-shopping.
– More socially aware consumers.
– A trend towards items that hold meaning for the wearer, rather than are just symbols of status. (Not that status symbols will go away. Just “meaning” will be more important.)
– More knowledge about companies and brands. For example, I can not only buy Apple products, but can read long dissertations on its business model, learn the life story of the CEO, and even see updates about his health. It took me about a minute to find information on their mark-up. This puts even more pressure on companies to behave in an exemplary way.
Any others? Thoughts?
UPDATE: And this morning we see an article that “fewer people feel guilty about wealth.” Well, that was quick.