Consumer Behaviour During the Recession
Recessions can bring upon radical and disruptive changes in consumer behaviour. The OTO Research report confirms that during this recession 80% of consumers are going to change their spending habits. 89% of consumers are going to systematically check online what and where the best products are, and what their value for money is. Consumers are getting savvy in the way they optimize their spending. During a recession, the role of your brand is to build trust and justify the value for money.
I have identified four major consumers trends that will shape consumer spending and behaviour for the next 24 months and beyond.
1. Cash Squeezing
With markets tumbling, property prices dropping and job security a distant memory, consumers are in a money saving mindset. Consumers are making full use of the Internet to save money. Case in point, visitors to online coupon sites increased 42% year on year, while time spent on these sites is also up by 28 percent year-over-year. In another example of the cash squeeze, consumers are getting a cheaper caffeine fix at home rather than at more expensive coffee shops. Tesco in the UK has seen sales of coffee machines rise by 76 per cent and sales of ground coffee up 13 per cent compared to last year. Sales of thermal mugs have also risen by 78 per cent.
2. Sellsuming
Consumers, empowered by the Internet and cash-strapped, are embracing the idea of making money instead of just spending it or saving it. As Trend Watching states in their latest report "if saving is the new spending, then making money-from selling personal assets, properties and creations-outshines saving". Established online platforms like eBay are serving this new trend well, however there are excellent examples of this sellsuming trend (my personal favourites include):
Parkatmyhouse.com - connects those who have parking spots to rent out with those who need them. Car owners can pre-book a parking spot daily, but can also make one-off bookings for a football match or a day of shopping in the city.
Giftcardrescue - service that allows users to exchange their unwanted gift cards. Consumers create an account and provide details of the card they have and GiftCardRescue will indicate the redemption value it's willing to pay.
Ether.com Phone Advice - by signing up for a free Ether number (which is forwarded to any regular phone number), consumers with specific expertise - from holistic life coaches to PowerPoint wizards-can charge their customers per hour, minute or per call.
The government is also taking advantage of the Sellsuming trend - Assembly Bill 1920 (also called the Solar Surplus Power Bill) in California, which will enable solar power-producing consumers to be paid by their utility company for any excess electricity they generate on an annual basis. Michigan, Minnesota and Rhode Island are considering similar legislation.
3. Escapsim
Consumers are spending money on things to distract themselves from our economic headaches, and the entertainment industry should be elated. Attendance to cinemas is up 13% year on year; Fast & Furious tore up the record for the most lucrative opening weekend for a movie released in April.
Brands that embrace and invite a positive proposition (embracing this need for escapism) will do well during these difficult times. Philip Graves, author of the Consumer Behavior Blog has a fascinating piece on the psychology of a consumer mind during a recession, and the need of many people to restore their emotional balance through what they consume.
4. Word of Experience
Consumers are sharing and talking about their experiences with brands, products and services. The OTO Research confirms 54% of consumers say that their primary source of information when choosing a brand is the Consumer Generated Content about the product and brand experience. Even for the mythical iPhone, PleaseFixtheiPhone.com proposed to users to list the product flaws and asked Steve Jobs to fix them. More than 250,000 votes and 1,600 posts in less than a week! Monitoring and understanding what consumers are saying online about your brand is no longer an innovation but a necessity.
