With mainstream media still focused on the frugality of consumers as a result of the great recession, many retailers are missing out on opportunities to tap into recovery. J. Walker Smith, Executive Vice Chairman of The Futures Company & President of Yankelovich Monitor, shared insights into these new realities during a keynote session at this week’s sold out CRMC 2010 Conference in Chicago.
During the session titled, “The Recovery Consumer Marketplace in the Era of Consequences,” Smith pointed out that “consumer balance sheets are looking better.” After bottoming out in the beginning of 2009, he highlighted the fact that consumer net worth has actually increased in every quarter and consumers have also shed much of their debt. Other positive indicators pointing to an upward trend in consumer spending include consistent increases in sales of new cars and homes.
Because the recent financial crisis has shed more jobs than any previous recession, Smith admitted ongoing unemployment is causing some “bumpy behavior” for retail sales and “a slower recovery than we might like.” He also pointed out that two broad types of consumers have emerged after the recession: one that is “financially strapped” because they’ve been impacted by job cuts and another that has been “psychologically paralyzed” by all of the media attention and the fear caused by the recession. “Some consumers are starting to realize that they may have overreacted in the way they withdrew their spending,” Smith pointed out.
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While price has become a bigger factor for many consumers as a result of the recession, Smith stressed that it has not become the only influence. “Frugality is just a coping mechanism, not an aspiration,” he said. “Going forward, the defining dynamic of the marketplace will be the overhang of economic risk and consequences.”
He pointed out that retail brands only stoke the fear factor by offering huge sales and focusing on bad news and focusing on the risk and rewards of trading up or down in product quality. “The value equation has been redefined,” Smith said. “The era of consequences will be guided by responsibility, vigilance and resourcefulness. Spending will be shaped by prioritization and networks.”
With social networks a key theme throughout the conference, Smith pointed out that retail brands will need to “figure out the permission pathways of where and how to engage consumers.”
In addition to Smith’s presentation and keynotes from other futurists, the CRMC Conference agenda was also packed with case studies from retailers including Best Buy, Bass Pro Shops, Jos. A Bank, New York & Company, Petco, Loehmann’s, GameStop and Macy’s.
