retail news in context, analysis with attitude

There have been a couple of stories this week pointing to shifting priorities among US consumers, as the economy enters what might be called “the new abnormal”

The Wall Street Journal writes that “Americans are spending more on electronics like iPads and flat-screen televisions and less on durable goods like furniture, washing machines and lawn mowers, according to government data released Tuesday.

“The shift reflects a change in priorities for American consumers. After pouring money into all aspects of their homes during the previous decade, consumers are redirecting their purchases to eye-grabbing technology and socking away more of what's left over into savings.”

Meanwhile, Bloomberg frames the shift this way:

“The new abnormal has given rise to a nation of schizophrenic consumers. They splurge on high-end discretionary items and cut back on brand-name toothpaste and shampoo. Companies such as Cupertino, California-based Apple, whose net income jumped 94 percent in its last quarter, and Starbucks Corp., which saw a 61 percent increase in operating income over the same time frame, are thriving. Mercedes-Benz is having a record sales year; deliveries of new vehicles in the U.S. rose 25 percent in the first six months of 2010. Lexus and BMW were also up. Though luxury-goods manufacturers such as Hermes International SCA and Burberry Group Plc are looking primarily to Asia for growth, their recent earnings reports suggest stabilization and even modest improvement in the U.S.

“In such an environment, optimism about the economic future ebbs and flows constantly, with far-reaching consequences for a nation in which consumer spending accounts for 70 percent of the gross national product. It’s an economy that suggests an EKG- shaped recovery -- a sequence of mini booms and busts as consumer fads and pent-up demand drive sales, until the impulses fade.”
KC's View:
Referring to current trends as an “EKG-shaped recovery” is apt, since it is likely to give a lot of retailers heart attacks.

A constant refrain here on MNB has been the belief that even in tough times, aspirational customers do not lose their aspirations - they just have to find new ways to satisfy those impulses. I suspect that is what is going on here, to some degree; an iPad or a latte or a BMW say something about a consumer’s aspirations ... they are perceived as being a reflection of the shopper’s personality and self-worth. (The recession, apparently, hasn’t made us any less shallow.) And so marketers, even in tough times, would do well not to always cater to the lowest common denominator, and to find new ways to appeal to aspirational shoppers.