NEWS10 July 2009

Consumer spend trends could outlast recession, says IRI

North America

US— Consumer research house Information Resources Inc (IRI) has predicted that US consumer spend is likely to remain sluggish beyond economic recovery.

In its new survey Competing in a Transforming Economy 4.0, the firm identifies a new “consumer equilibrium…in which behaviours initially implemented to weather the storm have the potential to last well beyond an economic recovery.”

IRI discovered that nearly 70 per cent of consumers earning under $35,000 were delaying electronics, furniture and clothing purchases. In addition, 60 per cent of consumers in the same income bracket are changing their definition of what is essential compared to 58 per cent earning $35,000-$54,000, 46 percent earning $55,000-$100,000 and 34 percent in the over $100,000 bracket.

Households with kids are the most likely to reduce or postpone spending on non-grocery purchases.

IRI categorised three emerging types of shopper: optimists, maintainers and pessimists. The firm said that pessimists exemplify many of the attitudes that are driving behavioural change across channels and categories, such as searching for sale prices ( 87 percent versus 82 percent for all households), making personal care products last longer ( 62 percent versus 55 percent for all households), and buying fewer prepared meals at grocery stores ( 61 percent versus 55 percent for all households).

Thom Blischok, president of consulting and innovation at IRI, said: “Forecasts indicate that 2009 will continue to be challenging and 2010 will improve slowly, which leads one to believe that consumers’ current spending strategies are not a flash in the pan.”