Shifts in shopping
This recession has been especially hard on consumers by reducing their income and wealth. How has this double blow affected how consumers spend? N.C. State University economist Mike Walden responds.
“Well, consumers are doing things that we have never seen them do … in order to try to moderate their spending. Now certainly one of the most common is they are trading down to less expensive brands of the same product. And we see that across the board: restaurants, home goods, et cetera.
“But they are also doing some more subtle things. For example, we have data that show that consumers are actually going shopping less frequently. And when they do, they are actually using some subtle techniques to try to moderate their shopping and their spending. For example, they are using more shopping baskets rather than shopping carts. Now you might say, ‘Well, so what?’ Well, if you have got a shopping basket you can get fewer items in there, and so if you consciously make that decision to use the shopping basket rather than the larger cart, that is going to limit how much you can buy.
“And companies are responding. Companies aren’t just sitting back and observing this. They are responding. They are recognizing what consumers are doing. And what we are seeing some companies do in response is to come out with new basic brands using their brand name but saying, ‘We are coming out with a new basic version of this brand at a lower price’ to try to capture some of the frugality of consumers.”Category: Economic Perspective