State of the Consumer
By Staff -- Gifts and Dec, 3/1/2008 12:00:00 AM
Surveys everywhere tell the same story: Consumers are not confident about the economy; they're worried about being laid off, affected by the falling housing market and rising gas prices, planning to pay down debt and reduce spending, shopping for needs rather than wants, and looking for sales. All this according to Worthington, OH-based BIGresearch's January Consumer Intentions & Actions Survey.
Only a third, 33.6 percent, are very confident/confident in the chances for a strong economy. That represents the lowest reading since September 2005 (post-Hurricane Katrina), and is almost 17 points lower than a year ago (50.5 percent). Some 41.5 percent predict there will be more layoffs in the next six months, though a majority — 50.4 percent — believe that conditions will remain the same.
Slightly more than a third of respondents are affected by the problems in the U.S. housing market. Of those, 45.5 percent are dining out less, 42 percent are driving less, 37.8 percent are more often on the hunt for sales and 36.9 percent shop closer to home, while 35.8 percent are taking fewer shopping trips, and 35.7 percent are spending less on clothing. Even more, 74.5 percent, are impacted by gas prices. Of those, 41.5 percent are consolidating their shopping trips, 40.6 percent are shopping closer to home, 35.4 percent are looking for sales, while 29 percent are clipping coupons.
When it comes to spending, 41.2 percent of consumers indicate they've become more practical and realistic in their purchasing — up slightly from December (40.3 percent) and January 2007 (39.6 percent). And 49.9 percent are focusing on “needs” over “wants” in purchasing, up from December's 47.4 percent and January 2007's 48.5 percent. Almost two in five plan to pay down debt; 33.7 percent plan to decrease overall spending, and 28.3 percent to increase savings. Paying with cash more often is also on the rise at 23 percent.
The 90-day outlook for retail merchandise categories included in the gift market, such as toys and games, CDs/DVDs/Videos/Books and decorative home furnishings, is down compared to both December and last January. However, though they're still down from last January, purchase intentions for furniture, housing and major home improvements are up from December.
The Long View
A longer view of consumer behavior reveals some changes that may outlast the bad economic weather. The Vertis Communications Customer Focus: Decade of Data study found that many more women are involved in purchasing decisions, even in traditionally male categories such as consumer electronics. In 1998, only 69 percent of women aged 18–24 reported being involved in the decision-making process when purchasing home electronics; in 2008, 91 percent report they are a part of the process. It also found that a substantial majority of women ages 50 and over — 68 percent — have access to the Internet, up from only 30 percent in 1998.
Since 2004, fewer shoppers visit a store without first researching their purchases. Prior to entering a store in 2008, approximately 57 percent of adults will look through advertising circulars, 50 percent will conduct research on the Internet, and 38 percent will use catalogs. In 2004, 31 percent of adults indicated they entered a store without any prior research; this number is down to 17 percent in 2008.
Some 40 percent of Americans indicated they're less likely to make purchases over $100 in the coming year (24 percent more than said the same after 9/11). Of those planning to make a big buy, car purchases are up and vacations are down.
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