A new report has highlighted that despite news of an increase in consumer confidence, the economic downturn will have a long-term effect on consumer spending habits, and the recovery process will go through three distinct stages before everything is back to normal.
A report from WPP’s global retail practice has revealed the significant shift in consumer behaviour and despite the news that consumers are spending again, they are definitely buying less.
The report titled ‘Playbook 2: The Sky Did Not Fall’ and is the second instalment after ‘Playbook 1: Through the Looking Glass’. The purpose of the report is to help retailers and suppliers navigate through the rough times.
One of the major highlights of the report is how it outlines that consumers will move through the recession in three stages, not dissimilar to the way an individual copes with grief.
Stage one: Acute Stress is characterised by anger and sadness, Stage Two: Acceptance and Stage Three: Moving On.
It was outlined that consumers are now solidly in Stage Two, due to the fact that they are shopping again, in stores and online, and are relieved that the sky did not fall in.
“Wallets are open, but only a crack,” said David Roth, CEO The Store – WPP Europe, Middle East, Africa and Asia. “Consumers are purchasing primarily to fill basic needs. They’re tentative about the state of the economy and are ready to snap their wallets shut at the least provocation from negative economic news or a tone-deaf sales pitch.”
While consumer anxiety will subside, the report asserts that the underlying retail trend will be long term and retailers need to be prepared for this.
“Retailers need to reconfigure their space or else they will be left with large stadiums designed for a sport that customers no longer want to play,” said Roth.
Some consumer trends picked up in the report include: the new purchasing mentality, where consumers are often settling for a cheaper brand and saving the extra money; the expanding presence online, with more consumers choosing online stores; and a greater reliance on brand strength, with consumers often turning towards the brands they know.