Consumer Behavior in a Down Economy
In studying consumer behavior during a recession, Sharp Market Intelligence discovered that people spend on anticipated, rather than current, circumstances.
Home sales in the last six months have broken records. Car sales were higher than expected in September. Retail sales exceeded projections in October. Holiday spending is off to a brisk start. In light of the slumping economy and gloomy predictions by the vaunted Conference Board and others, what the heck are consumers doing?
Multi-tasking! Americans can worry and spend at the same time. While consumers are concerned about jobs, terrorism, and other threats, they are expecting better times ahead and are spending accordingly.
When a client asked us to investigate "consumer behavior during a recession," we discovered that many people spend on anticipated, rather than current, circumstances.
A consumer's long-range income expectations, coupled with easy access to credit cards and home equity loans, often bolster consumption even in the face of economic uncertainty.
On the other hand, even pessimists find reasons to spend in a down economy. Stocking up on household staples and investing in home entertainment are two ways these consumers "hunker down" for what's ahead.
The bottom line? Whether a consumer sees the glass half-full or half-empty, consumption always fluctuates far less than income.
Can your company take advantage of this quirk in consumer behavior? Do you know what other behavior/attitudes affect purchases of your product?
Seena Sharp authored the recently published Competitive Intelligence Advantage: How to Minimize Risk, Avoid Surprises, and Grow Your Business in a Changing World (Wiley). She founded one of the first competitive intelligence firms, Sharp Market Intelligence, serving clients from Fortune 500 firms to those whose names are unfamiliar – throughout the US, Europe, Asia and Africa. She speaks to business groups globally and has published numerous business articles.