Yahoo!Finance shares 17 ways customers are changing in light of experiences learned over the recent contracted economic situation. I’ve summarized them into the following few general categories:
1) Financially Wary
Because a large part of the economic situation was exacerbated by the failure of major financial institutions and banks, consumers have become exceedingly financially wary. They are now more cautious in using credit and going more for cash-transactions to avoid paying more in terms of “hidden” fees and charges, and other minutiae of barely legible stipulated terms and conditions.
This also means that they are more cautious in managing their debt and commitments and will opt to settle their payments quickly as opposed to going for monthly repayment schemes, just in case their job situation becomes untenable.
2) Less Luxury
Consumers are also likely to scale down their purchases and spending. Brand loyalty will be harder to cultivate as millions of consumers traded down to store brands over the past couple of years – with many of them planning to stick with them. The quality of off-price products has turned out to be better than expected, so there may be little reason to pay more for brand-name goods with essentially the same quality.
Consumers will also look away from temptation – perhaps with less window shopping to avoid impulse buying at stores.
There’ll also be what the article referred to as “Food Frugality” – where spending on restaurants is down, but those who do eat out are ordering fewer side dishes and appetizers or substituting an appetizer for a main dish. Others are cutting back on home meals and taking other steps to reduce food costs.
Consumers, with increased wariness and resourcefulness will now look to negotiate more to have more “bang for their buck”. It’s no longer cool to pay the list price for everything, and consumers are less embarrassed asking for discounts. Retail merchants won’t always haggle, but eBay sellers will, and state-your-price websites like Priceline have been booming.
3) More resourcefulness
With less income or purchasing power, consumers are now going to be more resourceful in fulfilling their needs and desires without breaking their savings accounts. This might mean taking more responsibility for their own finances and careers, undertaking more do-it-yourself projects, and learning how to cook at home instead of eating out. Even for holidays, while overall traveling spending may decrease, creative, off-the-beaten-track or budget destinations will go up (i.e. let’s go camping!).
Interestingly, the article also mentions that Renting could become a prevailing mindset as the trauma of foreclosures, job loss as well as new financial regulations (especially regarding credit and loans) make it difficult for consumers to own “stuff”.
There was also mention of an increase in “closet shopping” where consumers look back into the piles of goods that have remain untouched, despite being purchased several years ago. Consumers are also looking to declutter more, as they scale down their expectations – hence the likely increase in consumers participating in online reselling sites as well as local car boot/garage/yard sales.
Along with this DIY approach will come a rise in gardening – veggies from the backyard are usually cheaper, and more healthful, than those from the store. That’s one reason sales of canning equipment have boomed over the past two years. Flowers from the garden make excellent gifts as well.
On the plus side, this will likely mean that consumers become less wasteful – when there’s less money, there is less of an inclination to waste!
Perhaps the biggest impact in the way customers have changed is what I would call the “redefinition” of things. The article mentions less healthcare as unemployment skyrockets, leaving many without health insurance or needing to cut back on care to save money – so what does that truly mean for the state of the healthcare and insurance industries?
Educational enhancement to ensure market relevance will also be important. Where it was once possible to get decent wages and jobs without higher education, it will no longer be viable in an economy where colleges continuously mint fresh graduates armed with shiny new degrees.
To that end, it will be interesting to note consumers volunteering more – not just because of social reasons, but as a means to maintain social contacts and to build experience in an economic environment where jobs are scarce or cutting back.
In the long run, there will also be a redefinition of what success is. I find this to be so true: “We used to measure it by how much money and stuff we had. Whoops. With jobs scarce and money tight, consumers are seeking more satisfying work–and giving up material goods to get it.”