NEWS/ARTICLES

IN A RECESSION, SHOPPERS DON'T STOP BUYING

In a recession shoppers don't stop buying. They just buy differently. With all the R-talk the risk is that we over-react.   The facts are that many sectors are really hurting. Anyone in construction, finance or the automobile industry is really feeling the pain right now. But many categories are either holding their own or doing quite well. The vast majority of people are still in work, their interest rate has come down or is heading down as soon as their fixed rate mortgage rolls over, and there are plenty of bargains out there if you've got the money to shop. One of the big factors is that people are nervous about extending themselves financially because it's difficult to be confident about job situations right now. Consequently people are being a little more cautious about spending and making commitments. But they haven't stopped spending. They're just spending differently. What are the behavioural changes that happen in a recession?   •Some consumers become more ‘value’ oriented, some more ‘price’ oriented and some just make substantial behavioural changes altogether eg the relationship between restaurants, take-out and the impact on associated wine and beer buying behaviours. Right now McDonald's NZ is looking at expanding their business (see NZ Herald 5 May 2009) •• Consumer Value Perceptions and evaluations tend to shift in a recession as with any other significant event. It is useful to broadly understand these shifts and not to generalise The following are some of the behaviours typically shown by shoppers currently:     •Economise, reduce consumption in that area, cut back eg fewer lattes per week •Value-seek, maintain consumption, reduce quality and price eg Fast Food rather than restaurants •Trade-up, reduce quantity, increase quality or size  eg one expensive holiday per year rather than three affordable ones •Substitute, cross-category exchange eg stop using taxis, start using buses •DIY, maintain consumption, grow / make your own eg renovate own bathroom •Bargain hunt, extensive searching, shop around, research eg using the web to gather info before going shopping •Negotiate, seek lower price or added benefits eg bargain harder when purchasing a used car •Shift from new to used eg Trade Me, second hand stores •Shift from Branded Retail Market to Grey markets eg Farmers markets, Otara markets, parallel importers etc •Shift balance from Out Of Home to Home eg less going to movies more DVDs •Radical or Partial lifestyle changes, eg moving to cheaper area, communal or Family sharing, Co-operative sharing of home produce etc • The point here is to understand which of these, if any, is happening in your market? Don't generalise. Think about how to respond. More on that next week.