Everyone has reacted to the recession. One implication for the food industry is that many brands’ value proposition—the reason consumers feel good about spending their money—have been permanently altered. Adweek published a story (A New World for Grocery Shoppers) describing many recession influenced consumer behaviors, however, I think the story underplays the permanence of the consumers’ change.
Most analyses focuses on how behaviors have changed and presume that when the economy recovers, behavior will simply revert, rather than asking the critical question, what lessons have people learned during the difficult times. As I reflect on the lessons discussed with friends, one core lessons is the false promise of debt. With this lesson, I feel the society adjusting its notion of what is affordable, and the financial risk people are willing to adopt. Hence the change to many brands’ value proposition. People don’t want the same as they did before.
If correct, the implications are many. Using grocery shoppers as an example, I’d expect a trend to consumers reducing household inventory, which will be reflected in many ways:
- smaller transactions
- increased purchases of smaller packages, or
- greater time between purchases for durable goods.
There was a time in the United States, where repair shops were plentiful. People bought goods, and when they broke, the item was repaired. Between the nineteen eighties and now, lots of repair shops went away as people simply bought a new device. Could it be that normal was the mind set of the nineteen fifties and sixties, and it is the last thirty years that are the aberration. If so, when the economy rebounds, consumer spending habits might look less like the credit driven past and more like the savings driven economy before 1975.