Consumer Spending & Cost-Cutting Strategies Examined

Perhaps at no time in recent memory have consumers been so thoroughly, closely and frequently studied as those living during The Great Recession.

Another report about their spending and cost-cutting strategies from Information Resources Inc. has detailed which groups will be most likely to continue these habits long-term. According to company president Thom Blischok, “we went beyond studying the common spending, self-reliance and self-health strategies that are becoming common place in today’s environment and examined how economic pressures have driven different types of consumers — by income level, household composition and even varying consumer mindsets — to change their strategies.”

Citing what it calls a “Misery Index” reflecting consumer economic wellbeing and expectations about the economy’s future, it currently stands at 14% (vs. 13% one year ago and below 8% in 2007). With most forecasters seeing a slow 2009 and a modest improvement in 2010, the report says current spending strategies will stay with consumers. The company maps the buying landscape with three factors:

• Income Level: consumers in the under $35K bracket have seen the most-drastic change in expectations and plans, though nearly ½ of those in the over $100K bracket report postponing non-grocery purchases (For more details go to Appendix item 1)

• Household Composition: Asked whether households w/o children were more or less likely to continue purchasing brand names, 78% of households with kids earning under $55K are postponing non-grocery purchases; but 64% of this same segment will continue treating themselves to affordable indulgences vs. 54% earning the same without children present.

• Consumer Sentiment: IRI identified three categories of shoppers: optimists, maintainers and pessimists. Pessimists are the poster children for the behavioral change researchers are claiming for all consumers, such as searching for sale prices (87% vs. 82% for all households), making personal care products last longer (62% vs. 55%), and buying fewer prepared meals at grocery stores (61% vs. 55% for all households).

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