Of the demographically representative set of more than 3,000 consumers surveyed:
- About 75-80% said they were concerned about either losing their job or someone in their immediate family losing a job;
- About 50% feel the economy will not recover for at least two years;
- Consumers estimated that their overall decline in spending was 8.8% versus a year ago – approximately twice as much as they reported last October;
- About 60% of consumers said they plan to spend less over the next six months.
Our study finds that consumer spending has declined across all categories over the past 12 months – including such staples as groceries which were stable in our October survey.
Views towards personal finances have also continued to decline. While the recent jump in household savings rates to 4.2% has been highly touted, it is still well below the 7% average over the past 60 years. In fact, one-fifth of the consumers surveyed said they plan to save “a lot more” than they have historically after the recession is over.
“One key finding of the study is that there are indications of seismic shifts occurring in how U.S. consumers plan to behave in both the near-term and long-term,” says Andrew Rees, VP and Head of L.E.K.’s Retail Practice.
According to the study, 45% of consumers are now actively trading down to less expensive brands and an additional 30% report that they are mixing in less expensive brands with their traditional purchases. This means that 75% of consumers are buying less expensive brands.
50% of consumers are buying items at the same price, but buying fewer of them. 50% of consumers said they are buying lower priced items this year compared to last and of this group, approximately 70% are saying that when they buy, they also buy fewer items.
In addition, about 40% of consumers said that they are actively shopping at less expensive stores and an additional 25% of consumers said they have been mixing in some shopping at less expensive stores with their traditional stores. This means that about two-thirds of consumers have migrated to less expensive stores. This is a significant shift of consumers moving from traditional channels to lower price channels.
Perhaps most worrisome for retailers and consumer goods manufacturers in the longer-term, 40% of consumers also said they would continue to spend less even when the economy recovers.
Dan McKone, VP and co-author of the study added "Retailers and consumer goods manufacturers would do well to look beyond the recent fluctuations in consumer sentiment (which still remains at historic lows) and recognize that not only have consumers made fundamental changes in their buying behaviors, but that many of these changes could be much more long-lasting than they’d hoped.”
For full details of this study or to schedule an interview with authors Andrew Rees or Dan McKone, please contact Sandra Riel at 617-951-9507 or firstname.lastname@example.org
About L.E.K. Consulting
L.E.K. Consulting is a global strategy consulting firm that specializes in corporate strategy, transaction services, and performance improvement. Founded in 1983, L.E.K. currently employs over 900 professionals in 20 offices worldwide. Global clients include Fortune 500, FTSE 100, Eurotop 300, and many of the largest firms in Asia-Pacific. With a reputation for solving the most complex issues, L.E.K. collaborates with business leaders to accelerate the pace and precision of strategic decision-making.