Deutsch Study Americas Wallet Shows Impact of the Economy on Consumers
by Steve Cypher on Friday, March 6th, 2009Focus groups and in home interviews in seven cities reveal the new rules of American consumption
Caught between rising prices and diminishing resources
Here at Auto Credit Express, we see that the latest study of consumer habits comes from Deutsch, a marketing communications agency based out of Los Angeles, California. The company conducted a two month study of over 175 people in New York, Detroit, St. Louis, Dallas, Chicago, Los Angeles and Duck, North Carolina (okay, guys, we’re still on board with this).
Here is what the president of Deutsch, Mike Sheldon, had to say about it, “Consumers find themselves caught between rising prices and diminishing resources, and they aren’t reaching for their wallets so quickly. Our aim was to better understand when the wallet was opened, what influenced their purchases. How had their mindset changed? What we discovered along the way was, despite the current gloom, there is a light at the end of the tunnel.”
Here are some of the findings of the report:
• Tidal shift from Conspicuous Consumption to Conscious Consumption - Consumers are spending less, but more importantly, they are spending smarter. After years of spending freely, they are paying closer attention, checking receipts, clipping coupons and questioning every purchase.
• It’s Bigger Than the Economy - Conscious, conservative behavior is the result of three converging trends: economy, environment and health. These “new grooves” of behavior will not go away when the economy turns, but will instead become habitual.
• Huge Collective ‘Sigh of Relief’ - As bad as things are, consumers feel an odd sense of relief that the consumerism binge is over and that a positive outcome from this crisis will be more personal responsibility. Some consumers even expressed mild optimism that this will ultimately be good for our country.
• Spending Up to a Point - The first expense cut will be eating out, followed by vacations, clothing and big ticket items. After years of luxury being democratized, luxury will become exclusive again.
• Irrational Exuberance to Exuberant Rationality - Consumers are strategizing purchases like never before. Wal-Mart, Costco, Sam’s Club and coupons are de rigueur, and consumers are taking it a step further by doubling up and timing coupons and rebates, trading coupons with friends and, in general, learning how to game the system to gain any advantage possible.
The Bottom Line
Although the sample group seems to be especially small, the cities seem to represent a cross-section of those that have gradually been caught up in the current economic crisis (Detroit being first, followed by St. Louis, Los Angeles, Chicago and Dallas). The press release did not explain where Duck, North Carolina fits into the mix, although it certainly represents a more “rural” section of the country.
In any case, the findings certainly seem to represent most of the things folks here in Michigan have been practicing for the better part of four years.
