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Psyche of the U.S. Shopper

The economic downturn results in changing consumer mood and behavior.

FoodProcessing.com
By Diane Toops, News and Trends Editor

Tracking the psyche of the U.S. shopper and how changes in her behavior affect brand choices is extremely important during this economic crisis, according to “Grocery Buying in the Current Economy,” a report from St. Petersburg, Fla.-based HealthFocus International, a subsidiary of Irwin Broh and Associates.

In February, the U.S. Bureau of Labor Statistics reported an 8.1 percent unemployment rate. Although high, this means 91.9 percent of people who want to work still have a job. While the press focuses on the unemployment rate because it is an available measure, the loss of a job is not the only factor affecting purchase behaviors.

“I think companies need to be aware there are many things that affect shoppers as much as unemployment levels,” says HealthFocus International President Barbara Katz. “One in three shoppers has suffered income losses although not job losses recently, yet this number goes unreported.” 

Which of the following best describes your household income compared to six months ago?
Same	49%
Somewhat Reduced	20%
Higher	16%
Severely Reduced	15%
Source: HealthFocus International

This important measure is known as “underemployment.” Underemployment includes those who have greater skills or educational qualifications than are needed for their job or people who have had their hours or income reduced. The latter affects over one-third of shoppers in this study. The bottom line is these shoppers need to cover the same household bills with less money.

Adding to consumer woes is the loss of their retirement income. It is estimated that money held in retirement accounts lost 32 percent of its value through December 2008. According to a GFK/Associated Press poll in February, 53 percent of Americans (up from 34 percent in 2005) do not feel they will have enough to retire on.

So even the employed shoppers have expenses they have to cover with the same or lower salary and, at the same time, a need to figure out how to increase their retirement savings.

Whether they have a job or not, all consumers have been affected in some way by the economy and are engaging in money saving behaviors regardless of the impact on their own incomes.

“Almost all shoppers are psychologically affected by the downturn,” says Katz. “The reason it’s important to track psyche is that psyche can turn around a lot more quickly than finances. The psychology of this country turns as soon as the press turns and these shoppers can start spending again. However, shoppers suffering income and/or job losses will take longer to recover. You have to know who’s who.”

	Nervous About the Economy	Confident About the Economy
Income the same or higher than six months ago	54%	83%
Income severely or somewhat reduced than six months ago	46%	17%
Source: HealthFocus International

Groups of shoppers most impacted and who warrant careful attention include: shoppers with a recent reduction in income (56 percent are reducing the amount of groceries they buy); 18-29-year-old shoppers (they are particularly nervous about the economy); and those earning less than $50,000 a year. Overall, 46 percent of those with income reductions have responded with some level of brand switching, versus 35 percent of total shoppers.

“Recycling and ‘green purchasing’ seem to be receiving contrary treatment from shoppers that have had severe income cuts recently,” points out Katz. “The majority of the shopper population seems ready to maintain their recycling behavior or purchasing of green products. However, when it comes to shoppers with severe income reductions, they are more likely to be increasing their recycling efforts but reducing their green purchasing efforts in the past six months. Recycling is a way they can continue to be responsible at no added cost.”

Mood can be as impactful as income in changing some shopping behaviors during an economic downturn. Nervous shoppers are more likely to use coupons and delay large item purchases even if their income has not been reduced.

Perception often is more important than reality. When shoppers begin to believe the worst is behind them — if stock market indicators keep moving upward, employment statistics move downward and media reports become more optimistic — old habits will return. They will begin to feel more confident about opening up their pocketbooks, trying new products and returning to their favorite brands.

If you want to know who’s who in making shopping decision changes over the past six months, including households with kids, contact Julie Johnson to purchase the full report ($900) at info@healthfocus.com.

 

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