Consumers see economic collapse as a welcome slap in the face
More than half of all respondents across the globe have permanently changed their attitudes toward saving as a result of the credit crunch, and many see the changes they’ve made as a positive thing. Americans in particular are more focused than ever on paying down debt and controlling their finances. Forty-one percent of people globally, including one in four Americans, said they were glad the world had an economic crisis, as it has helped them realize their priorities, and 52 percent of Americans have permanently changed their attitudes regarding the importance of saving money, according to a study from Chicago research company Synovate.
While 42 percent of Americans are looking forward to being able to spend freely again, 59 percent said they are going to do their best to not go back to the way they spent before. Overall, 26 percent of respondents are using more cash now as a better way to curb spending, including 21 percent of Americans. However, more than half of Americans are using cash less and 34 percent are using debit cards more, demonstrating a focus on control and having the money before spending it, but also flexibility and convenience. Thirty-eight percent of Americans say they are using credit cards less, and checks are also on their way out, with 48 percent using them less.
Other changes Americans have gone through include: revising their budgets (17 percent); changing banks (6 percent); selling shares or taking money out of the stock market (9 percent); switching to safer investments (7 percent); and personal or partner job loss (9 percent). There has also been more closing of credit card accounts (15 percent) than opening (9 percent), and 13 percent of Americans admit to having made late payments on a credit card.
Respondents were also asked what they have postponed buying (or spent significantly less on). Twenty-two percent of Americans have been holding off buying a new TV, computer or other large appliance. In addition, 16 percent of Americans say they have postponed or spent less on purchasing a car, and 10 percent have delayed or spent less on a vacation.
Changes have been more personal, too. Globally, 6 percent of people say they have delayed having a baby, including 2 percent of Americans. Five percent of respondents globally have postponed surgery in the past six months, including 7 percent of Americans. Of the Americans who delayed a major purchase, changed a life decision or spent less, 45 percent did this because they didn’t have enough money, while 11 percent were waiting for a bargain and another 11 percent thought it just seemed wrong to spend a lot at the moment.
In order to understand people’s main financial priorities across the globe, Synovate asked respondents what they would do if $1,000 landed in their lap today. The most popular response was put it in a bank savings account (28 percent), followed by pay off/pay down debt (17 percent); spend it on necessities like food or household bills (17 percent); and spend it on something fun (15 percent). More than one-third of Americans would use the $1,000 to pay down debt, while 23 percent say they would put that money straight in the bank and 21 percent would spend it on necessities. Only 7 percent would blow their loot on something fun.
Although over half of Americans agree that their trust in financial institutions has declined and 57 percent believe that more government regulation is needed for the financial industry, people are not going to stop investing in the future. The one thing most respondents agreed on: It is the responsibility of each generation to leave the country better off for the next generation (83 percent of Americans and 84 percent of people globally agreed). For more information visit www.synovate.com/insights.
Low price on poor product not a great deal
While much has been made of America’s newfound thriftiness, shoppers may be less focused on price than most marketers think. In fact, according to The New Value Paradigm: Theatrics of Thrift, a study from Bellevue, Wash., research company The Hartman Group, when shown 25 different statements about grocery store products and what factors they consider most when making a purchase, respondents ranked “It works well/tastes good” No. 1, followed by concerns about waste, such as “Will this product actually be consumed in its entirety by my family?” Price only came in at No. 6.
For example, one of the items that ranked poorly in the study was a Costco multipack of chips. “While everyone said their family ate the BBQ and other flavors, no one ate the blue cheese or ranch. Although the price was very low, consumers saw it as having a poor value,” says Jarrett Paschel, vice president of The Hartman Group.
Consumers are actually willing to pay a little more for a product they believe they will use fully, says Michelle Barry, senior vice president of The Hartman Group. “Waste is something they see as costly.”
Barry believes that while consumers are managing their economic anxieties with the pretense of saving at supermarkets by using shopping lists and coupons, the actual amount they are spending on groceries and the items they purchase aren’t all that different than what they tossed into their baskets before the slump started. As a result, while marketers are predicting that these sweeping changes will stick, in terms of food, consumers will come out of this recession with little in the way of changed habits, claims Barry. For more information visit www.hartman-group.com.
Consumer confidence on its way up globally
With many economists reporting that the worst of the global economic crisis appears to be over, consumers around the world are expressing more confidence about their personal financial situations, according to the Nielsen Global Consumer Confidence Index, conducted by New York researcher The Nielsen Company, which rose from 77 index points in April 2009 to 86 in October 2009. Brazil, Hong Kong and South Korea recorded double-digit boosts in confidence, while the U.S. recorded its first increase in consumer confidence since early 2007. But although most consumers are feeling better about the economy, they remain cautious about spending.
Consumer confidence rose in 45 out of the 52 countries (Ukraine and Saudi Arabia were added in the latest round of the survey). Consumers in India, Indonesia and Norway topped the confidence index, while the most pessimistic consumers were in Latvia and Japan. Hong Kong posted the largest consumer confidence increase in the third quarter compared to the second, up 14 points from 79 to 93 points, followed by South Korea (+13 points) and Brazil (+12 points). Confidence rose 8 points in India, 6 points in China and 4 points in Russia compared to the previous quarter. Consumer confidence fell in only two countries: Spain (-4) and Japan (-2). Australia and New Zealand also posted double-digit increases during the last quarter, while Europe’s two largest economies, France and Germany, posted the highest increases in the Eurozone, up 7 and 5 points, respectively. For more information visit www.nielsen.com.
Viewing of movies and TV shows online doubles in ’09
The number of U.S. broadband households watching premium online content, including movies and TV shows via the Internet, doubled in the last year, according to Broadband, Communications and Entertainment Bundles, a study from Parks Associates, a Dallas research company. Over 25 million U.S. broadband households regularly watch full-length TV shows online, while over 20 million watch movies online.
The growing popularity of online portals such as Hulu.com shows rapid growth in the number of viewers who use the Internet to watch long-tail and premium content. This shift highlights the opportunity for service providers to extend their current pay-TV and video-on-demand services to include online and mobile video features. For more information visit www.parksassociates.com.
Americans dining out less but not cooking more? Recession heats up microwave cooking
The economic downturn can be blamed for a number of lifestyle changes, but causing Americans to cook more is not one of them. Despite the decline in dining out and the fact that more Americans are eating at home, more are turning to their microwaves to serve their food up for them. Americans used their microwave ovens more in 2009 and their stove tops less, according to Port Washington, N.Y., research company The NPD Group.
Approximately 20 percent of all meals prepared in U.S. homes from 1990 to 2007 involved the use of a microwave, until last year when usage rose 10 percent. Stove tops remain the most popular cooking appliance, but the percent of main meals prepared on a stove top dropped from 52 percent in 1985 to 33 percent in 2009.
“Microwaving has been flat for two decades, but it increased last year as Americans found a way to eat at home and not cook,” says Harry Balzer, chief industry analyst at The NPD Group. “We’re using our microwaves to warm and heat more, but not prepare more dishes from scratch.” For more information visit www.npd.com.