“Downturn Generation” changing food spending habits

Posted by Daniel Palmer on 28th April 2009

The current recession has created a new niche of consumers identified as the “Downturn Generation”, who are likely to have a major impact on the consumer packaged goods sector.

The research, “Dissecting the Downturn Generation: Recognising and Leveraging Permanence in Today’s Transformational Economy,” by Information Resources, Inc. (IRI), has found a new generation of Americans adopting practices similar to Depression-era shoppers and similar responses could be expected here in Australia.

Shoppers are changing behaviours to adapt to the unstable economy and developing new habits they intend to continue even if the economy improves. The report reveals permanently changed approaches among three groups:

* Optimists – believe “things will get better during the next 12 months,” are spending wisely, cutting back selectively and making sacrifices as a last resort
* Maintainers – agree that, “the economy won’t get worse, but it won’t get better either” and are also spending wisely, but are more aggressive about making cutbacks
* Pessimists – identify with the most dire predictions, believing “if you think times are hard now, next year will be worse”, and are taking every opportunity to reduce expenditure and hunting tirelessly to find deals

“Optimists, maintainers and pessimists are each weathering the recession in unique ways, but all three groups have made obvious behavioural and attitudinal changes and many admit they intend to prolong the use of their new methods,” said IRI Consulting and Innovation President Thom Blischok. “We believe the Downturn Generation will continue their current behaviour patterns until they have regained confidence in the U.S. economy. Interestingly, shoppers looked for a return of ‘stability’ as a signal that the economy is pulling out of the recession, in particular, ‘stability’ across gas, food and energy prices, as well as home values.”

Shoppers’ weakened financial conditions are profoundly affecting how they shop and what they buy, with more than 69 per cent saying they are more likely to look through retailer ads for deals and around four in five (82%) more likely to look for sale prices once in the store. Importantly for food manufacturers and retailers, just under two-thirds (65 per cent) say price is becoming more important than convenience in brand purchases.”Financial pressures are causing shoppers to give up favourite brands, buy smaller quantities of preferred items or postpone non-essential purchases for entertainment in order to save money for their most important needs,” Mr Blischok advised. “Additionally, between 30-47 per cent of consumers are buying less healthy products, and fewer fresh produce and organic items. This is a fundamental shift from the trends we noted before the economic downturn.”

New Consumer Purchasing Strategies for Diet, Home and Healthcare
Consumers are becoming more resourceful and strategic when planning their purchases for meals, wardrobe, home and personal care.

Low prices and sale items continue to dominate shopper decisions at stores, and consumers are increasingly collaborating with friends, family and neighbours to share information, split costs and divide bulk goods purchased at a lower cost.

“We see that shoppers are altering their spending habits across all significant lifestyle categories. CPG retailers and manufacturers must plan for the continued practice of these new behaviours in order to meet consumer needs and continue to thrive in business,” Blischok continued. “CPG innovators can inspire the Downturn Generation by providing promotion strategies that match their desires, speaking to them through online sources, and realising that a product that is good enough is really good enough. These strategies can help brace us for the new conservative consumer.”