Dealing with the Newly Thrifty Consumer

Expect this to be the name of the game in the coming year!! Consumers are hunkering down, and are finally saving again. The change has been most drastic in the US, with savings as a percentage of income finally creeping above a dismal ZERO. While good for the overall economy during this readjustment, it is bad for companies whose survival depends on consumers spending money - in other words...pretty much everybody.

There are a few bright spots. Tight economic times tend to benefit those who peddle vices - think gambling, tobacco, and alcohol.

In a report to be released today, The Boston Consulting Group has found that while the U.S. economy has been put to rout, and while Canadians are in a structurally superior position headed into recession, it is the Canadian consumer who intends a more dramatic pullback in spending.

Jennifer Wells. "The new consumer: Tight-fisted and 'emotionally fragile'." reportonbusiness.com (January 1, 2009). http://business.theglobeandmail.com/servlet/story/RTGAM.20090101.wconsumermain0101/BNStory/Business/home?cid=al_gam_mostview (accessed January 2, 2009).

Two things jump out at me in this article. First, a reminder that Canada is very different that the US and this should never be glossed over. Second, it's going to be a tough year for marketers. In the past, the main challenge may have been to get consumers to spend money on YOUR product instead of competitor's. Now the challenge will be to get consumers to spend money at all.

62% of us plan to cut back spending in 2009. That's more than the US with 58% and even Europe's 'Big 5' with 56%.

How will this change the actions of marketers? The study provides another clue: "Whereas 65 per cent of U.S. respondents say they will pay more attention to product promotions and buy more stuff on sale, a full 72 per cent of Canadians intend to adopt the same behaviour."

Ahh the dreaded price competition. A game where no one wins...except perhaps the thrifty consumer.