It’s no secret that times are tough. And, as more people are being laid off or seeing their hours reduced, we should watch where consumers are cutting back and where they are still willing to spend.
Gadgets and Games Takes a Hit
According to a recent survey by Forrester Research, more than 60 percent of respondents said they are less likely to buy a hand-held video player, a satellite radio, a smart phone, a video game console or a portable GPS. They say gadgets in particular are most likely to be hit.
“It doesn’t matter which category you are talking about — people are evaluating potential purchases with a careful eye,” said Charles Golvin, an analyst with Forrester Research, which released results Monday of survey of 5,109 U.S. adults.
Internet and Cable Still Strong
But, it’s not all bad news. 7 percent of the respondents to Forrester said they were more likely to buy a laptop or HDTV, regardless of the economy. And very few people are planning to cut back on services such as the Internet, their mobile phone or cable television. (I, myself, have been “planning” to drop HBO from my cable for a few months now, but I haven’t quite made the call just yet. And with the new season of Conchords here, it’s even less likely that I will anytime soon!)
Six of seven adults said they would not change their Internet service or may upgrade it, despite economic worries. Three of four said they wouldn’t change or might upgrade their mobile phone service. One of three was strongly committed to keeping and possibly adding premium cable channels or HD television.
People Still Using Land Lines
This one really surpised me. Only 5 percent of people planned to cancel their land lines, roughly the same percent who were going cell-phone-only before the banks and investment firms started failing this Fall.
“Communication services are a must-have in a recession,” the report released Monday stated. However, Golvin cautioned that things could change if the economy worsens. Someone who is laid off may choose to pay for health insurance before taking care of the cable bill. For now, however, consumers are finding value in their cable and Internet services. “For service providers, there is some good news,” Golvin said.
Liquor Still Flowing
While fewer people are eating out, there are some indications that booze is still a priority for consumers. The CDC particpated in a study revealing that alcohol consumption increases during times of economic stress — a rather (if you’ll forgive the pun) sobering thought.
New Administration Drives Some Consumer Confidence
Some reports indicate that consumer attitudes are already shifting with the swearing in of President Obama. eBillme, an online spending index examining quarterly trends along with Javelin Research, polled 1,600 consumers to measure projected online spending.
50 percent of consumers reported they will have more confidence in the economy while more than 1 in 4 feel more comfortable increasing their everyday spending now that the new administration has taken over.
With a major U.S. gift-giving holiday approaching, retailers may actually see some relief as 18 percent of consumers told Javelin they plan to spend more this Valentine’s Day as compared to last. And, 18 percent are planning to make their Valentine’s Day purchases online this year.
If this truly represents consumer attitudes, it could bring a great sigh of relief to retailers who have been trying to adjust their inventories in response to slowdowns in consumer spending.
Conflicting Reports Continue
With Reuters reporting U.S. consumer confidence at a near-record low and Forbes and MarketWatch reporting a slight uptick, it’s hard to know which source to trust. But, I am a strong believer in the “perception is reality” approach to our economy. I’m not suggesting we can solve all of our problems with positive thinking … I haven’t gone off the deep end just yet. But, I do believe consumer confidence will grow as people begin to feel that action is being taken and we are in a forward motion.
Around this time last year, I blogged about the economy and how savvy marketers could turn the economy woes into PR gold ala the movie Mr. Mom. What I said then still rings true. Cutting prices is certainly an alternative for retailers. I know I’ve received at least a dozen texts and emails from friends telling me about all kinds of deals over the past couple of months. But, even more important than cutting prices, is simply finding creative ways to demonstrate that sense of “we’re all in this together.” The more brands can align themselves with their customers’ needs and concerns, the more they can motivate them to take action and ultimately create loyalty that will pay off in the long run.