The current economic conditions have changed the way many people shop. Some are able to weather the storm and carry on as if nothing has happened but this is clearly not the case for all. So exactly who has changed their shopping habits and how?
Synovate, a leading global market research firm, sought to understand how Canadians and Americans are changing their shopping behavior in the current economy. The study was conducted from June 29 to July 1, 2009 with 1,000 people in Canada and 1,000 people in the US via eNation, a Synovate Omnibus survey.
The two main strategies that people tend to adopt in these times are reducing their overall spending and changing their buying habits. Both have consequences for manufacturers and retailers alike. So what are North Americans doing?
The study found four key shopper groups across North America yet with significant differences between Canada and the US.
Some people are still essentially buying what they want and when they want (The dream is alive). For others, the economy has hit them hard and not only are they buying less, they're delaying purchases and switching to cheaper brands (The dream is gone). Then there are those who are buying the same brands but with less frequency (Tryin' to keep the dream alive), and those who are buying as much as ever but switching to lower cost brands (The new dream).
"This is a major game changer for most companies," said Rob Myers, Managing Director of Synovate in Canada. "If you are a big brand you need to carefully weigh the long term consequences of price reductions if you want to keep sales going. At the same time, you have to market to your key strengths when competing against lower price points."
Consumers are clearly looking for ways to save money and these are two key strategies that will work for companies in the short term. The real unknown is whether this pattern will hold for the long term.
"Many are claiming that we're witnessing a fundamental change in the consumer mindset and that we will never go back to the way things were," said Myers. "That was also said during the recession in the early 1990's, but clearly we came out of that with a strong consumption mindset. It's too early for anyone to say that our buying behavior has changed completely."
Canadians have either not been hit as hard by the economy or have not yet realized the current situation. Almost half of all Canadians surveyed are part of The dream is alive segment (have not changed their shopping habits) compared to less than one-third of Americans who are. An additional 35% of Americans feel that The dream is gone (they're buying less, delaying purchases and switching to low cost brands) while just 25% of Canadians have changed their purchasing behavior in this way.
"Canadians either have not woken up to the new economic reality or we have been more conservative shoppers already so we've not had to change our shopping habits as dramatically as Americans," said Myers. "From automobile purchases to consumer goods Canada have always been generally more conservative than our US neighbours."