Consumers worldwide are less inclined to cut back, but remain cautious when it comes to spending in the recovery, says a new report by The Boston Consulting Group.
In a backlash against overspending, shoppers are seeking bargains even when they don’t have to, and they are putting home and family above ostentatious luxury.
BCG’s 2010 report on global consumer sentiment, "A New World Order of Consumption: Consumers in a Turbulent Recovery," finds that pessimism is down from peak levels in early 2009, but anxiety continues to be higher than before the downturn in many markets.
Although expectations of a sluggish recovery are rising in mature markets, consumers in China, India, and Brazil—which experienced a slowdown rather than a full-blown recession—are much more optimistic and willing to spend. “Companies face a new world order of consumption as they head into a multispeed recovery,” said Catherine Roche, a Düsseldorf-based partner and also a coauthor. “It will require them to rethink their growth expectations and develop a highly de-averaged approach.”
Spending also differs by category and demographics. “Products for the home, and even some luxury categories, are seeing a resurgence,” notes Emmanuel Huet, leader of BCG’s Center for Consumer Insight. “Among consumer segments, companies can look to women, young singles, and couples without kids as groups with the most buoyant attitudes for continued spending.”
To help companies attract postdownturn consumers, BCG has identified six best practices that can be employed:
- Accelerate product innovation for the recovery. Feature quality and craftsmanship, especially in categories of health and wellness, home furnishings and appliances, and affordable luxuries.
- Upgrade consumer insight capabilities. Pinpoint opportunities for differentiation and growth in an uneven recovery. There are still pockets of opportunity everywhere.
- De-average the go-to-market playbook to capitalise on robust areas of demand. Where price pressure remains strongest, reduce “perceived” price differences. Closely monitor the price spread between manufacturer brands and private labels.
- Focus on the “last three feet.” Improve in-store presentations and sales-force effectiveness to capture consumers in the crucial space in which they make their final purchase decisions.
- Replenish the war chest with aggressive action on cash and costs. Continue to reduce complexity, eliminate underperforming SKUs, divest noncore assets, and simplify processes.
- Rethink the business model and develop new scenarios for a turbulent future. Anticipate the capabilities that will be needed in a much more uncertain economy, such as supply chain management, pricing, talent cultivation, and political lobbying skills.