business news in context, analysis with attitude

The Nielsen Co. is out with a new study suggesting that while the economy seems to be improving, with reduced unemployment, lower gas prices and a resurgence in consumer confidence, "consumers remain cautious when it comes to spending."

According to the story, "With more than half of consumers saying they believe we are still in a recession, many remain focused on mindful spending. Handling the essential expenses is a top priority, with 50% of respondents saying they’re using the extra money to pay off bills, while 36% are paying for everyday essentials like food. When it comes to non-essentials, consumers are choosing out-of-home entertainment and clothing as their top two ways to splurge.

"Due to economic perceptions, many consumers are likely to gravitate toward the middle ground when it comes to essential and discretionary spending through 2015. When asked about their optimism about the economy for 2015, 40% of consumers fall somewhere in between 'not optimistic' and 'very optimistic'."

The story suggests how marketers can appeal to these still-reticent consumers: "Promotions will be a key element to succeed, as consumers’ memories of recessionary struggles remain fresh. But training consumers to buy only when products are on sale isn’t the answer. Instead, retailers should carefully choose which discretionary categories would benefit most from promotions in order to entice consumers when they otherwise might not indulge."
KC's View:
I also think that retailers that take an aspirational approach to marketing can overcome people's financial reticence ... even when people are being tight with a buck, most of them long for better days. But I'm not surprised that people aren't spending away ... the depth and length of the Great Recession has a lot of people figuring that it ain't permanent.