The Great Recession spawned changes in shopper behavior that are likely to persist long after the economy improves. But according to a new report from New York-based PricewaterhouseCoopers and Retail Forward, a Columbus, Ohio-based Kantar Retail company, rampant deal-seeking is likely to give way to more pragmatic, practical purchases post-recession as consumers seek to establish a new normal.
"Although shoppers will retain some of their recession-induced behaviors, the post-recession shopper will be characterized as purposeful, rather than panicked," the report said. "Today's consumer will practice a more reasoned and rational trading down with deal-seeking behaviors like coupons and comparison shopping remaining post-recession."
According to the report, recession-era consumers became accustomed to using a variety of tools, techniques and programs designed to help manage spending and maximize savings, including list-making and meal-planning tools, online and mobile coupons, "opt-in" e-mails, comparison shopping sites and stepped-up loyalty/rewards programs. They quickly learned that the time they invested in using these tools and techniques was well spent, helping ingrain such activities into their shopping behavior.
As a result, the report said, "Retailers ... need to make promotion and savings-related information more easily accessible across all shopper touch points. They need to make savings explicit — no small print or jumping through hoops to get it — and they need to make promotion redemptions an easy, seamless experience across all purchase channels."
The report also said that although shoppers are likely to keep "wants" in check, "wants" are steadily being reintroduced into the equation as "frugal fatigue" begins to set in. However, shoppers have to balance the desire to reward themselves with current budget realities, creating a trend away from premium or highest-quality items and toward those deemed "good enough."
"The trend has been fueled by the democratization of design, i.e., the extension of designer offerings into mass retail channels, and the evolution of private brands that match (and quite often exceed) the quality and functionality of branded goods," the report said, predicting continued growth for "good enough" products post-recession.
Although trading-down behaviors related to the choice of retailer, product or brand are expected to lose some traction during the recovery, it’s no cause for alarm.
"Private label brands (especially in fast-moving consumer goods categories) will remain a significant factor due to their high quality at lower prices," the report said.
Historically, said Glenn Pappalardo, retail and consumer strategy team leader at PricewaterhouseCoopers, demand for private label goods slows when recessions end. But that might not be the case this time around.
"As retail brands continue to saturate categories that require little innovation to duplicate, retailers will create greater relationships with [national] brand manufacturers to offer exclusive brands," he said, a phenomenon that's likely to gain momentum as retailer bargaining power grows with continued consolidation.
To help keep store brands strong post-recession, Pappalardo said retailers might want to consider expanding their premium private label offerings to tap into growing demand for "practical pleasures." Citing lessons learned during the past two years, he told eReport that retailers “should also think long and hard before taking private label to price points that are particularly susceptible to economic shifts."
Pappalardo also suggested retailers use their private label programs to target demographic groups expected to lead the country into recovery. Unlike after the previous two recessions, the report said, baby boomers now on the verge of retirement will remain in recession shopping mode, putting the onus on Generations X (ages 29 to 45) and Y (ages 10 to 28), the latter of which was least impacted by the recession.
"These consumers traditionally perceive themselves as either 'innovators' or 'early majority' in terms of acceptance of innovation," Pappalardo explained. "Retailers must bond with them through [private label product] innovation and by communicating their brands' unique values — particularly those that resonate most with Gen X and Y — through well-placed and crafted advertisement."
For more information — or to download a copy of "The New Consumer Behavior Paradigm: Permanent or Fleeting?" — please visit
http://www.pwc.com/us/retail or
http://www.retailforward.com.
— Denise Leathers
