Survey shows frugality may be enduring trend
February 24, 2010
by Keith Nunes
NEW YORK — A survey of 2,000 consumers conducted by Booz & Company indicates frugality may be becoming an entrenched consumer behavior that is reshaping consumption patterns in ways that will persist even as the economy rebounds. The survey covers a broad range of consumer goods and services, but of particular note to food manufacturers is the finding that 64% of the consumers surveyed said they will shop at a different store with lower prices even if it is less convenient for them.
“Frugal behavior is now considered trendy by many shoppers, and will continue for years to come,” said Matt Egol, a partner with Booz & Company. “In this changed environment, marketers need to develop deeper insights into shopper attitudes and behaviors in order to better align their product, pricing, and marketing communications strategies.”
The survey also found that consumers have become less impulsive and are more disciplined. Seventy-nine per cent of the shoppers surveyed said they do research before shopping for food and beverage products.
The research consumers undertake before shopping includes clipping coupons and reading circulars to identify what is on sale.
The Booz & Company survey also noted that private label products are likely to continue taking share from branded products.
“Retailers are unlikely to give brands back the shelf space that private label has taken given their dependence on private label for profits,” Mr. Egol said. “In addition, consumers are reporting generally positive experiences when trying private labels, so for some consumers they are becoming preferred brands.”
Going forward, the survey recommends marketers build strategies that address where and why consumers shop rather than relying too heavily on a demographics-based approach that is often used for advertising buying. The consulting firm also recommends companies differentiate marketing messages and promotional offers to more price conscious consumers versus those who place greater value on brand and convenience.
“This more cautious consumer approach to spending began even before the recession came into full swing but has since picked up speed,” said Andrew Clyde, a partner with Booz & Company. “As manufacturers lured consumers with new promotions, consumers traded down and liked the experience. As the economy recovers, marketers need to better target their strategies to preserve the value of existing brands, and avoid destroying value through too blunt a competitive response across segments.”