New IRI report highlights recession-era consumers, trends

CHICAGO The current recession has created a new niche of consumers identified as the “Downturn Generation” by Information Resources Inc. in a news release Monday.

This new generation of Americans is adopting practices similar to Depression-era shoppers, implemented both to weather the recession and to keep a close eye on spending long after the recession ends.

The latest IRI Point of View, “Dissecting the Downturn Generation: Recognizing and Leveraging Permanence in Today’s Transformational Economy,” highlights how shoppers are changing behaviors to adapt to the unstable economy and uncovers the new habits they intend to continue even if the economy improves. The report reveals permanently changed approaches toward important rituals, including diet, self care and home maintenance and classifies three emerging categories of shoppers, which are:

• Optimists - believe “things will get better during the next 12 months,” are spending wisely, cutting back selectively and making sacrifices as a last resort;
• Maintainers - agree that, “the economy won’t get worse, but it won’t get better either” and are also spending wisely, but are more aggressive about making cutbacks;
• Pessimists – identify with the direst predictions, believing “if you think times are hard now, next year will be worse” and are cutting back wherever possible and hunting tirelessly to find deals.

“Optimists, maintainers and pessimists are each weathering the recession in unique ways, but all three groups have made obvious behavioral and attitudinal changes and many admit they intend to prolong the use of their new methods,” stated IRI Consulting and Innovation president Thom Blischok. “We believe the Downturn Generation will continue their current behavior patterns until they have regained confidence in the U.S. economy. Interestingly, shoppers looked for a return of ‘stability’ as a signal that the economy is pulling out of the recession, in particular, ‘stability’ across gas, food and energy prices, as well as home values.”

Nearly 64% of shoppers characterize their financial condition as a little or a lot worse off than last year; approximately 30% believe their finances will be a little or a lot better one year from now. As many as 70% of shoppers note they have less savings than they used to, while an equally significant 71% agree they have less total wealth.

Even though gas prices have declined as much as 50% from the highs of fall 2008, 73% of surveyed shoppers state rising gas prices “Impacted” or “Strongly Impacted” their financial situation during the past six months. In addition, 75% note rising food prices “Impacted” or “Strongly Impacted” their financial situation, even though food prices have largely leveled off or declined since summer 2008.

Shoppers’ weakened financial conditions are profoundly affecting how they shop and what they buy. More than 69% say they are more likely to look through retailer ads for deals, nearly 82% are more likely to look for sale prices once in the store and just under two-thirds of consumers say price is becoming more important than convenience in brand purchases.

“Financial pressures are causing shoppers to give up favorite brands, buy smaller quantities of preferred items or postpone non-essential purchases for entertainment in order to save money for their most important needs,” Blischok said. “Additionally, between 30% to 47% of consumers are buying less healthy products, and fewer fresh produce and organic items. This is a fundamental shift from the trends we noted before the economic downturn.”

New approaches identified include consumers turning to the plethora of information available on the Internet to help prepare for purchases, clip online coupons and research reviews, commentary and opinions on products and services before making a purchasing decision. In fact, more than 44% of shoppers are using online resources to find coupons today, and 55% of them plan to continue this practice into the future.

Low prices and sale items continue to dominate shopper decisions at stores, and consumers are increasingly collaborating with friends, family and neighbors to share information, split membership costs and divide bulk goods purchased at a lower cost. Approximately 59% visit multiple stores for the lowest prices, and 42% of those shoppers will continue to do so into the future. Almost one-third of consumers are making bulk purchases with others not in their households to secure low unit prices, and 35% of those shoppers intend to continue doing so.

Consumers are also cutting back on their healthcare costs, opting to treat themselves at home versus visiting a doctor and increasing their use of over-the-counter medications. Nearly 44% of surveyed consumers are trading their doctor for information on the Internet and half of those shoppers will use this strategy in the future.