Shifting Consumer Behavior in a Struggling Economy

I came across some primary research the other day that addresses how consumers are adapting their buying patterns and behavior in this time of economic stress and anxiety.   According to a consumer survey recently commissioned by NCR Corporation, consumers are changing how they learn about and locate the products and services they need.  Specifically, the study found that consumers are:

  • Using the Internet more frequently to research products and services
  • Searching more often for price comparisons, products reviews, promotions online or via email
  • Switching between retailers to get better value
  • Buying more discount or sale items
  • Shopping more frequently to take advantage of promotions

This isn’t totally shocking, but it does suggest that marketers need to adjust their approach to keep up with this evolving consumer.  It also underscores that increasingly, purchase decisions are being researched and evaluated online before the consumer enters the brick and mortar sales environment.  Now for the really sobering news.  This same report claims that 63 percent of consumers are trading down to store brands or generic versions of branded goods.  Just walk into Walgreens or Wal-Mart and take a look at how their store label is merchandised to their customers.  I was in Whole Foods last week and their “365” house brand is ubiquitous.  It dominates most of the end cap displays, and is discounted consistently.  House brands offer better margins, builds brand loyalty and retailers can be confident that no one else has their exclusive brand.

Private label products have always been around, and the segment has grown steadily.  But the wake up call here is that if two thirds of consumers are now consistently trading down to generics, the job of generating customer loyalty for name brands just got a lot tougher.  As if we didn’t have enough challenges.  Bottom line is that building value into your brand couldn’t be any more important than it is in the current economic environment.  So when you are considering cutting back marketing expenditures to improve the P&L, think twice.  Then do what you think is right.

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