New research from Mintel reveals that of the 13 key consumer markets in America, the only two categories for which consumers claim that they are spending more year on year are In-home Food (with a 14% net difference of consumers claiming to be spending more in this area) and Household Care (2% difference of consumers claiming to be spending more). Despite this, Mintel’s research finds consumer spend has in fact increased across all evaluated markets, highlighting the fact American consumers remain focused on getting the best deals for their dollars. Fiona O’Donnell, lifestyles and leisure analyst at Mintel, says:
“Although the country officially exited recession nearly four years ago and consumer expenditures are up, Americans retain a cautious approach toward purchasing and avoid conspicuous consumption. While conservative spending may be a result of lingering concerns over the health of the economy and a fear of debt—which affects consumers’ shopping behaviors and perception of how they make spending decisions, it is also likely that consumers’ attitudes have shifted. That is, rather than having pride in purchases and all things ‘new,’ consumers now appear to take pride in their ability to cut costs, find deals, and pay lower prices than retail.”
For the first time, Mintel has conducted an extensive comparative audit of US attitudes and consumer markets to identify exactly which market sectors have been the winners and losers of a changed economy, and how consumers have adjusted their attitudes and behavior as a result. When it comes to where consumers think they are cutting back the most, the Out of Home Alcoholic Drinks Sector appears to have taken the biggest hit with a net difference of 47% in favor of consumers claiming to be spending less on this area over the past year. Rounding out the top five areas where consumers believe they have reduced spending include: Leisure and Entertainment (-37%), Vacations (-36%), Dining Out (-33%) and Home and Garden (-32%).
Meanwhile, in terms of actual consumer category spend across the same markets, spend has risen year on year to 2012. Sectors seeing the greatest increase in spending over this period include Transportation (+7% year on year), Dining Out (+6%), In-Home Alcoholic Drinks (+6%), Out of Home Alcoholic Drinks (+6%) and Home and Garden (+5%). Even the lowest increased categories of Personal Finance (+1.4%) and In-home Food (+3%) have seen gains.
“In many categories, consumers have been conditioned by a nearly never-ending cycle of sales, coupon offers, members-only discounts, lower-priced product alternatives, etc., to avoid ever paying full price. Meanwhile, technological advancements of the past five years and mobile technology’s increasing penetration have made price comparisons and strategic shopping more accessible. For these reasons, marketers should not expect a swing back to pre-recession impulse buying habits and spending on credit,” Fiona O’Donnell says.
With the lifestyles of many American consumers in flux over the past five years, Mintel’s annual American Lifestyles report highlights the legacy of the economic downturn, demonstrating how frugal ways have become set in the nation’s mindset. When asked about how spending habits have changed over the past five years, some two-thirds (66%) of all Americans admit they spend money more cautiously. Demonstrating how cost-cutting is top of today’s consumer’s minds, four in ten (40%) Americans admit they are doing more free activities, while the same number (40%) look for more ways to save or invest money. Around four in ten (38%) say they are now spending more time with the family, but the same number (38%) say they are going on fewer vacations.
What’s more, revealing the impact of the economic crisis, more than two thirds (68%) of consumers say that over the past five years they have been more likely to pay attention to product prices, more than half conduct price comparisons (59%), buy items only if there is a need (54%), use coupons more often (53%) and wait for discounts before buying higher-priced items (52%). But more than this, it appears that this frugal behavior has translated into some long term lifestyle changes as well. Some 36% of respondents say they cook or bake more often from scratch; 31% say they entertain more at home rather than go out; and 27% say they do more do-it-yourself (DIY) projects instead of hiring a professional. “These actions were likely prompted by recessionary cutbacks. However, their lingering popularity shows that consumer behaviors and priorities appear to have changed, and the focus has turned more inward,” Fiona O’Donnell says.
About 34% of consumers use their extra money (after they’ve paid their bills and purchased the things they really need) to pay off debt. Just 22% say they put those extra funds into their savings account. “The most important factors impacting consumer spending/lifestyles are stagnant real wages, housing prices, rising educational and healthcare costs, and the lack of savings–retirement and otherwise,” says Susan Menke, category manager, US financial services at Mintel. “Consumers are experiencing a number of conflicting financial goals which is impeding their ability to save more, even though they want to.”