Americans are tightening their belts more as the country’s economic situation shows no signs of improving. The latest Consumer Spending Indicator study by NPD Group finds that only 35% of persons surveyed saying they have not changed their spending habits since the economy weakened. For those of us who have changed our ways, the first category which most people have cut spending is dining out (57% said they were cutting back on this category). The next categories likely to be cut are clothing (54%) and entertainment (50%). Interestingly, the categories least impacted by changing spending patterns are toys (39%) and video games (35%).
What do these statistics say about us? We are inclined to cut expenditures for which there are alternatives (eating at home rather than eating out), and we can cut spending by making do with our current situation, as in the case of the clothing category. The categories for which less people are reducing spending (toys and video games as well as beauty products and music) are “comfort” products. Music, toys, and video games represent opportunities for entertainment in the home, making dining out and out-of-home entertainment less appealing.
Are there other product categories for which the increase in consumer “nesting” will benefit marketers? The extent to which products can add value by reducing consumers’ out-of-home expenses appear to have the potential to win favor with the cost conscious. With no end to this rough economic period in sight, there appears to be plenty of time for marketers to respond to this shift in consumer behavior.
Link: Marketing Daily – “How We Cut: Restaurants First, Video Games Last”
I think most people have cut back from going out of their homes for entertainment was because gas prices were too much. Along with the rising gas prices, that also made everything else we consume go up in prices because of shipping. But now that gas has dropped, I would’ve expected that those areas would’ve gone up.
The reason why video games are still a lucrative business, because it’s been a way to escape reality. Also, at least for me, spending $50 on a nice dinner that satisfies you for a few hours does not compare to $50 on a game that can be played for 50+ hours.
As for other product categories, I believe that any products that promote ‘green’ use is going to go up. People nowadays are more aware of waste and pollution and are taking steps to better the environment. Since the economy is bad, people will be looking for was to waste less and save more.