A “new frugality,” born of The Great Recession and two consecutive years of declining consumption—the first time since the Great Depression—is becoming entrenched consumer behavior that will persist for years even as the economy rebounds, inevitably reshaping marketing strategies for financial services and other leading companies, a Booz & Co. survey of 2,000 U.S. consumers shows.
Americans will continue to focus on saving, avoiding risk, finding values and being more cautious and discerning consumers.
The new consumer spending report, Booz’s second since October 2008 at the beginning of the financial crisis, confirms a picture of pervasive retrenchment in consumer spending that spans a broad range of consumer product categories.
A scant 9% expect to spend at pre-recession levels on household products over the next 12 months, 10% on mobile phone services, 11% on health and beauty products and 18 % on apparel.
Moreover, 65% now consider saving to be more important than spending, 64% will shop at a different store with lower prices even if it is inconvenient and 55% would prefer to get the best price rather than the best brand. Only 32% believe the finances of their household will improve over the next 12 months.
“Frugal behavior is now considered trendy by many shoppers and will continue for years to come,” said Matt Egol, a partner with Booz. “In this changed environment, marketers need to develop deeper insights into shopper attitudes and behaviors in order to better align their product, pricing and marketing communications strategies.”
Booz suggests marketers differentiate their messages to reach those consumers who are more price conscious and those who place greater value on brand or convenience. Engage shoppers along the full path to purchase, rather than treating online and in-store interactions as silos, Booz says—advice that could also improve the experience of investors concerned about saving for retirement or putting a child through college.
Booz is making the full report available at its website.