The Post-Recession Consumer
How will consumers spend when the recession is over?
Posted August 11, 2009
The question I'm asked more than any other is, "How will consumers spend when the recession is over? Will they shop like they did two years ago or remain frugal?"
The recession has touched and changed consumers on every level - they've acquired new behaviors, thoughts, and feelings. They will therefore unquestionably spend in different ways following the recession.
Behavior: By necessity, consumers have changed their spending behavior. A quick look at retail sales figures tells a dramatic story of a swift and forceful shift in how consumers spend money. Every month that goes by reinforces those new ways of shopping.
Thoughts: In most of the interviews I've conducted since January I've heard a similar story of mindfulness in spending. Consumers are thinking about money and evaluating purchases in new ways. They're looking back at previous spending with surprise and insight. As one 38 year-old women I spoke with said, "I can't believe I used to spend like that! What was I thinking?"
Feelings: No matter how poor or wealthy, all Americans shared in the emotional turmoil of the recession. The shock and fear that accompanied the remarkable plunge in our economy left virtually everyone touched in some way.
The new American consumer will not return to rampant pre-recession spending levels. They've become more conscious and mindful about all the costs of consuming - those being money, security and time. And they've learned new ways to shop.
Insights acquired during the recession will crystallize a notion that Americans have been nursing for years - that perfectionism causes anxiety, and that "keeping up" keeps people apart. Many Americans are frankly relieved to have a little less expected of them and will live by a new mantra, "good enough is good enough."
All this is reinforced by environmentalism. For some it's a rationalization to soften the blow of living with less, for others it's a passion. Whatever the reason, reduced and conscious consumption has an ally that feels more positive to consumers than economic necessity.
However, while American values may have shifted toward simplicity and self-reliance - consumers aren't about to start churning butter or darning socks; they don't have the time or skills - not to mention that in today's high-speed world, it's boring. What they want are feelings of self-sufficiency, control and caring for others - what they'll buy are products that help them get there within the time and talent constraints of modern life.
Conscious and mindful consumption does not always mean buying less, it means that Americans will reevaluate and focus their dollars on the most psychologically rewarding purchases. During the recession, those purchases were most likely to offer the benefit of security - post-recession they're more likely to be focused on products that bring vibrancy and sensation to life, offer opportunities for self-expression and personal development and connect people to each other.
The post-recession consumer will be stronger, more agile, and more connected than ever. The recession will bring more mindfulness to the buying equation - which means that consumers will be calculating purchases in a more complex way.
Has the recession changed the way you spend money? Are those permanent changes?