IRI releases report examining consumer spending, cost-cutting strategies
CHICAGO Information Resources Inc. on Tuesday released a new report — Competing in a Transforming Economy 4.0: The New Equilibrium — that examined which consumer groups will be maintaining their current cost-cutting strategies through an economic recovery.
“Since the beginning of 2009, a new consumer equilibrium has emerged in which behaviors initially implemented to weather the storm have the potential to last well beyond an economic recovery,” stated IRI consulting and innovation president Thom Blischok. “In this phase of our research, we went beyond studying the common spending, self-reliance and self-health strategies that are becoming common place in today’s environment and examined how economic pressures have driven different types of consumers — by income level, household composition and even varying consumer mindsets — to change their strategies.”
The “Misery Index,” which captures current consumer economic wellbeing and expectations of future economic conditions, remains high for U.S. consumers at more than 14%, versus 13% in March 2008 and less than 8% in March 2007. Forecasts indicate that 2009 will continue to be challenging and 2010 will improve slowly, which leads one to believe that consumers’ current spending strategies will continue. Though perhaps even more important than the strategies themselves are the consumer groups who are driving them, IRI stated. IRI has maintained an ongoing dialogue with consumers since the economy began declining and has found that the following consumer segmentations play an important role in understanding the drivers of saving strategies:
- Income Level
IRI closely examined how income levels drive commitment to saving and cash management strategies. For instance, do higher income households feel less pressure to cut back with higher cash inflow? Or, do they experience more pressure with the concern of replenishing their shrunken investments quickly to support the leisurely retirement they had planned before the recession?
During the fourth quarter of 2008, IRI asked consumers if they were postponing such non-grocery purchases as electronics, furniture and clothing, and found a whopping 69% of those earning under $35,000 were delaying these purchases, versus 63% earning $35,000-$54,000; 59% in the $55,000-$100,000 level and 46% in the over $100,000 bracket. In addition, 60% of consumers earning under $35,000 are changing their definition of what is essential, compared with 58% earning $35,000-$54,000, 46% earning $55,000-$100,000 and 34% in the over $100,000 bracket.
- Household Composition
IRI also studied which spending strategies are driven by households with kids versus households without kids. For example, do households without kids stick to their preferred brands and products since they have fewer mouths to feed, or are households with kids bending to picky eating habits and sticking to their preferred products in certain categories?
While households with kids are most likely to reduce or postpone spending on non-grocery purchases, affordable indulgences are quickly becoming a theme for these stressed out consumers. In fact, 78% of households with kids earning under $55,000 are postponing non-grocery purchases; but 64% of this same consumer segment is treating themselves to affordable indulgences, compared with 54% earning the same income without kids.
- Consumer Sentiment
Understanding the mindset of consumers who are driving strategies is a key to success for retailers and manufacturers. IRI uncovered three emerging categories of shoppers: optimists, maintainers and pessimists. Is the optimist the first to adopt dramatic saving strategies, thinking the economy will get better soon, and they won’t have to employ them for long? Or, is the pessimist driving the trends in expectation of a long recession?
From its post-inaugural survey, IRI discovered that pessimists exemplify many of the attitudes that are driving behavioral change across channels and categories, e.g. searching for sale prices (87% versus 82% for all households), making personal care products last longer (62% versus 55% for all households), and buying fewer prepared meals at grocery stores (61% versus 55% for all households).
“Learning more about the specific consumer segments that are leading change empowers both retailers and manufacturers to craft marketing messages targeted towards their most important consumers and will also help to get these messages in front of their consumers at the right time and the right place,” Blischok said.
Russian-born businesswoman and former Soviet TV anchor taps PR firm to promote cosmetics business
FORT LAUDERDALE, Fla. Former Soviet TV news anchor Galina Todd has retained the international public relations firm TransMedia Group to promote her cosmetics business.
“We can’t wait to introduce this gorgeous 52-year-old Russian magazine cover girl to the American masses,” stated TransMedia Group CEO Tom Madden, a former VP at NBC.
The Moy Sekret by Galina line is a collection of American and European-made Russian beauty secrets for skin and hair care. TransMedia will be launching her newest products, including an all-natural hair restoration and thickening line that is licensed out of Spain, as well as her French perfume called “Mon Secret.”
“I want my generation of baby boomers, the most populous generation of people in the world today, to wake up every morning and say ‘Hello Beautiful!'” stated Todd, who recently was named Russian-American Businesswoman of the Year by Russian magazine Bomond. “I am confident that TransMedia Group will help us target this group, as well as all groups, of strong women full of hope and the desire to be beautiful.”
HairTech International to launch Paris Hilton hair and nail care products
BOSTON HairTech International, which creates, distributes and manufacturers beauty products for salons and the mass market, is launching for 2009 a new line of Paris Hilton hair and nail care products.
HairTech was promoting the launch at the recent NACDS Marketplace conference held in Boston.
Through its licensing deal with the celebrity, HairTech is launching the Ultimate Brush by Paris Hilton, Polish by Paris and a Paris Hilton hair care line infused with pomegranate, coffeeberry and soy bean.
To promote the launches, Hilton is scheduled to make appearances for specific retailers and there are expected product giveaways on Oprah and Ellen DeGeneres shows for the fourth quarter.
In addition, for every Ultimate Brush and bottle of nail polish sold it will help finance a meal for an underprivileged child somewhere in the world through a tie-in with the Interface Foundation charitable organization.