Someone sent me an interesting article via Linked In on how consumers are adapting to the current economic times post-recession. The article originated from a Consumer Insights Director at BIGinsight, mostly written to an audience of retailers and marketing professionals in consumer product companies. (See link to article below).
What interested me about the article was the insight that consumers have changed spending habits and patterns over time from the “spend now, worry later” mentality before the economic crisis to a more responsible and frugal spending trend seen today.
As a bankruptcy attorney, I have to agree that many of the clients that come to us seeking relief from their mounting credit card debts are less likely to have accrued such debt from recent frivolous purchases, shopping on line for things they don’t need, or large-ticket items they simply can’t afford. Rather the debts my partner and I see lately on credit cards are often day-to-day living expenses like gas, groceries and prescriptions. These are the necessities consumers are struggling to pay for every day due to a loss of employment, reduced hours or overtime, or an unexpected life event like divorce, illness or accident. The article posed a question, “are frugal consumers the new normal?” From our perspective, frugal consumers are simply shifting their spending from luxuries to necessities to hang on and survive!
These purchase shifts from “wants” to “needs” won’t help retailers and product manufacturers much, at least not until the economic recover picks up pace. Nearly two thirds surveyed by BIGinsight feel pessimistic or uncertain about an economic recovery. Spending shifts may be here to stay while more and more people seek help for debt reduction or relief, and not because of excessive or needless spending, but simply because they have no other way to pay for basic living expenses.
Raysa I. Rodriguez, Esq.
Source: BIGinsight™ Monthly Consumer Survey, Jul -12