Recessions can cause radical and disruptive changes in consumer behavior. The OTO Research report confirms that during this recession 80% of consumers will change their consumption habits. 89% of consumers will systematically check online what and where the best products are, and what their value for money is. Consumers are getting smart in how they optimize their spending. During a recession, the role of your brand is to build trust and justify value for money.
I have identified four major consumer trends that will shape consumer spending and behavior over the next 24 months and beyond.
1. Cash withdrawal
With markets falling, property prices falling, and job security a distant memory, consumers are in a money-saving mindset. Consumers are making full use of the Internet to save money. For example, visitors to online coupon sites increased 42% year over year, while time spent on these sites also increased 28% year over year. In another example of a cash crunch, consumers get 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 by 13 per cent compared to last year. Sales of thermal mugs are also up 78 percent.
2. Selling
Internet-empowered and cash-strapped consumers are embracing the idea of making money rather than simply spending or saving it. As Trend Watching states in its latest report, “If saving is the new expense, then making money from the sale of personal assets, property, and creations dwarfs saving.” Established online platforms like eBay are serving this new trend well, however there are great examples of this selling trend (my personal favorites include):
Parkatmyhouse.com – Connects those who have parking spaces to rent with those who need them. Car owners can pre-book a parking spot every day, but they can also make one-time reservations for a football game or shopping spree 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 they are willing to pay.
Ether.com Phone Advice: By signing up for a free Ether number (which forwards to any regular phone number), consumers with targeted expertise, from holistic life coaches to PowerPoint wizards, can charge their clients for hour, minute or per call.
The government is also capitalizing on the sellsuming trend: Assembly Bill 1920 (also called the Surplus Solar Energy Bill) in California, which will allow consumers who produce solar energy to have their utility company pay for any excess electricity they generate in a year. base. Michigan, Minnesota and Rhode Island are considering similar legislation.
3. Escapism
Consumers are spending money on things to distract themselves from our financial headaches, and the entertainment industry should be ecstatic. Movie theater attendance up 13% year over year; Fast & Furious broke the record for the most lucrative opening weekend for a film released in April.
Brands that embrace and invite a positive proposition (embracing this need for escapism) will do well during these trying times. Philip Graves, author of the Consumer Behavior Blog has a fascinating article on the psychology of the consumer mind during a recession and the need for 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. OTO research confirms that 54% of consumers say their main source of information when choosing a brand is consumer-generated content about the product and brand experience. Even for the legendary iPhone, PleaseFixtheiPhone.com asked users to list the product’s flaws and asked Steve Jobs to fix them. Over 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.
