A new decade begins in 2011, and Americans are clearly ready for a clean slate as they exit the “aughts.” After years of turmoil, they have learned how to manage their money and they took firm control of their futures in 2010. Financial concerns and unemployment are still heavy on their minds as the country struggles to climb out of recession, but having adjusted to the “new normal” in 2008-2009, Americans overall are not scrimping and saving as much as they did then.
Consumers are maintaining many of the shopping habits they formed during the recession. They continue to buy private label products, clip coupons, pay with cash instead of credit, and keep their eye on price tags. They are budget conscious, but have learned to make room for luxuries they had to go without in recent years, such as leisure travel. Vacations are back on the map. Families, in particular, were determined to get away in 2010 and many tried out new destinations.
The Internet is as important as ever, with most Americans going online for shopping and entertainment. They have grown accustomed to watching streaming video from the web, enabled by their high-speed connections.
Electronic devices caught the fancy of many Americans, who are now proud owners of iPhones, iPads, and Kindles. Smartphones and tablet computers allow them to be connected to the Web from anywhere. Mobile shopping took fire in 2010. Owners of these devices used them (at home and in-store) to get product specs, read reviews, and compare prices. Armed with mobile devices and their newfound shopping savvy, they are smart, involved consumers as they enter the new decade.
What follows is a look at the trends of the past year, with an eye to where they are likely to lead in 2011. This report is based on a review of the 2010 Research Alert Yearbook, which will be available next month in print and as a searchable PDF (visit www.epmcom.com/yearbook for a complete table of contents and ordering information). The Yearbook aggregates, organizes, and analyzes the research covered in 2010 in the EPM newsletters Research Alert, Youth Markets Alert, and Entertainment Marketing Letter.
THE RECOVERY MINDSET
Purse strings have loosened somewhat as the recession has worn on and the economy has shown signs of improvement, but a majority of consumers are still cutting expenses in an effort to save a little here and there.
Spending As The Economy Recovers
Over the past few years, Americans have continually reevaluated what they are willing to trade down on and what they can do without or have less of. They will likely stick with the strategies they have adopted — couponing, buying private label, budgeting, etc. — for the foreseeable future, even as the economy improves.
Demographic differences have impacted Americans’ attitudes toward the recession, which have in turn had various affects on their spending:
• Boomers feel they no longer have the financial security that they have worked their whole lives for, and as a result, they are among the most likely to have significantly changed their spending habits.
• Gen Xers are working on building their lives and families, and have little left over to save, which leaves them with a bleak outlook on retirement.
• Millennials realize their dreams of career, home, and children may have to wait as he economy recovers. They found out that their parents are not always able to help them out financially and are learning to manage their money better.
• Hispanics and Blacks are optimistic about economic recovery, and as a result are not worried about delaying major purchases.
The steady growth in online spending in the prior decade was interrupted in 2009 as consumers kept a tighter rein on their budget, but it bounced back in 2010. One driver of that recovery is the growing number of those who shop via mobile phone.
Consumers are also shopping online more as they try to extend their budgets. They are more likely than in the past to go online to compare prices, research products, and find and print coupons. Women are more cautious online shoppers, worrying more about transaction security and considering shipping costs, whereas men focus more on product availability.
Shoppers are creatures of habit and prefer to buy the same products and brands repeatedly, though the recession forced some to change their routines. Private label brands are a key strategy for consumers trying to save money on groceries and apparel. Lower income households are more likely than average to be interested in such products, but a majority of all consumers are buying more private label brands than they did a year ago.
Although they buy private label items, some shoppers are beginning to think there are too many private label brands in stores and that retailers are squeezing out the national brands they like.
Another common recessionary savings strategy is clipping coupons. About half of consumers actively seek out coupons, while the other half happens to simply run across them. Consumers also plan their shopping trips using lists which include details such as the brand they prefer, product size and price.
Shoppers with a “saver” attitude are less adventurous in stores than are those with a “spender” attitude. The former concentrate on sticking to their shopping lists and using coupons for as many purchases as possible, whereas the latter like to explore the store, think shopping is fun, and consider shopping a way to relax.
The 80/20 rule that states women make 80% of household purchase decisions and men make 20% is shifting. Men are taking a more active role as shoppers, buying a greater proportion of household groceries, items for their children and families, and clothing for themselves.
Men approach shopping differently than women — for example, they buy clothing when they stumble upon something they like rather than making specific shopping trips for an item. When making purchases for their family, dads consult their spouse, but they also talk to other dads for advice.
Like women, the vast majority of men are involved with causes and like to see companies supporting issues relevant to them. Most would try an unfamiliar brand or pay more for a product that supports a cause that they think is important.
Women express themselves through fashion, and private label goods can draw women to the retailers that exclusively carry the brands.
Women have fully embraced online shopping because it allows them to shop any time and anywhere. Black women choose to shop online because they can find their size and get the best prices. Boomer women like online shopping because they can avoid in-person hassles of shopping, including dealing with sales people.
Women are open to interacting with brands online — they visit branded sites, receive email marketing messages, and read and share opinions — all of which inform their purchase decisions.
Marketing & Advertising
Marketers and advertisers are embracing new media, especially social networking. And consumers are paying attention to these ads; they particularly notice ads on Facebook that include mention of their actual friends rather than those that list the number of fans the brand has. Blacks and Hispanics are active users of digital media and more likely than Whites to respond to digital advertising, such as banner and pop-up ads.
Traditional media are effective, too, with most Americans saying they are swayed by ads they see in magazines.
Shoppers stray from brands whose images have been tarnished. Consumers’ impressions of brands can be shaped by media coverage of brands that have made a misstep. A celebrity spokesperson can also grow consumer awareness. Even when a spokesperson makes a public gaffe, fewer than a third of consumers choose to boycott the associated brand as a result.
Causes & Social Responsibility
In an era when consumers weigh nearly every purchase against their budgets, marketing and advertising are as important as ever. Consumers are spending, albeit cautiously, but they are willing to pay more for brands that support causes which are important to them.
A majority of shoppers would switch to a new brand or product of equal quality and price in order to support a cause — and women are particularly swayed by causes. Among those causes that were most important to Americans in 2010: economic or job development, health and disease, and hunger.
Consumers want to get involved with businesses’ social responsibility projects by contributing ideas and answering surveys about what is important to them. They show their approval through loyal spending with businesses that get it right, and they boycott those that get it wrong.
Blacks and Hispanics in particular reward businesses that get involved with causes that matter to them. They are loyal to companies that show genuine interest in their local communities.
Causes are also important to gay and lesbian consumers. Most gay and lesbian consumers want to see companies support LGBT community events. When addressing LGBT consumers, marketers should carefully consider the vastly different segments of this group — older gays, younger gays, and lesbians — to appropriately represent them in advertising.
Philanthropy
The older Americans are, the greater average amount they donate to charity. They give the most money to religious and educational institutions. More than half of Americans make donations at the checkout counter, followed by sending money by mail, giving money at a gift shop, and donating online.
Americans find companies that partner with a non-profit organization in their cause marketing efforts to be more credible. Their skepticism of corporations makes them more likely to donate to a non-profit and more likely to participate in an event organized by a non-profit.
Environment
The vast majority of Americans take part in eco-friendly activities, such as recycling. They do so not only to improve the environment, but to improve their quality of life and their communities. “Eco-friendly” is beginning to lose its luster as a marketing play in 2010.
A majority of Americans believe companies’ green claims, though most also think that companies exploit these claims to drive sales. They still want to buy eco-friendly products, but their budgets are less flexible to allow them to spend more for green items.
Food & Beverages
As in recent years, shoppers are trading down to save money by choosing private label brands over national brands. They are also making choices for convenience, opting for more prepared foods.
Americans still have difficulty identifying the difference between “organic” and “natural.” While they prize these healthy options, they often do not buy them because of their higher price.
Americans are spending less at restaurants than previously as they continue to watch their budgets following the recession. Fast food spots were hardest hit, though young men still make frequent visits.
One bright spot for quick service restaurants is that Americans are more likely than in previous years to go out for breakfast. Americans enjoy dining out and view it as a reward or treat. They like to eat out as opposed to at home because it means no cleaning up after cooking.
Although they do not like cleaning up, most people like to cook, and having home-cooked meals is important to them. They are most likely to have a home-cooked breakfast and dinner. They most commonly have lunch away from home, with sandwiches being a popular option.
Americans put about 60% of their food budget toward food at home, and about 40% to food eaten away from home. What they keep to eat at home has changed over the decades — they have fresh veggies instead of canned or frozen, they are more likely to have wheat or multigrain bread instead of white bread, they have fresh fruit and not sodas. One constant is that most always have milk on hand, as they did decades ago.
Diet is a major concern for most Americans as the country’s obesity rate rises. They think about what they eat both when they go food shopping and when they cook. They are less conscious of their nutrition habits when eating on the go, and Americans were more likely to eat while traveling in 2010.
When in a hurry, snack foods are a common meal replacement. One positive effect of the recession is that Americans have cut out sweets as they cut spending, helping them establish healthier eating habits.
Homes
Home ownership is still a significant aspect of living the “American Dream,” but Americans are less likely than in previous years to think that a home is a good investment for the future. They may be right — most homes lost value in 2010.
Some Americans are taking advantage of the slumping housing market and seeking a deal on a home purchase. First-time homebuyers accounted for a larger share of home sales than in the past. Most first-time buyers believe that they have prepared for all expenses of home ownership, but about half are surprised by some costs.
Home buyers are as likely to have found the home they eventually bought online as they are to have found it through a realtor. In fact, they are slightly more likely to use the Internet than a realtor at some point during their search.
The top factors in Americans’ choice of home are that it is in a good neighborhood and close to their workplace.
Many homeowners are choosing to remodel their current homes rather than buy a new home. Adding a bathroom and fixing up a kitchen or bathroom are the most common projects. While most plan to hire a contractor for their remodeling project, two thirds also plan to do some of the work themselves.
Some homeowners have traded the hassles of home ownership for renting. Renters, on the other hand, continue to aspire to owning a home. Most renters who moved in 2010 sought to take advantage of deals during the down market to find an apartment with better amenities or more space.
Automotive
The top two factors affecting Americans’ automotive purchases are price and reliability. Auto shoppers most commonly say they do not care whether their car is foreign- or domestic-made; among those with a preference, they are nearly three times as likely to prefer American vehicles to foreign vehicles.
The year 2010 was the first time used car shoppers were as likely to say they primarily shopped online for their vehicle as at dealerships. Nearly half of new car shoppers plan to buy the same brand as their last vehicle.
New car shoppers are more likely than used car shoppers to say that incentives have an affect on the timing of their purchase and their choice of make and model. Most car shoppers research financing options online, and half seek pre-approval through a bank or credit union before they buy.
While Americans are warming to alternative fuel vehicles, they note that they have both positives and negatives — they save on fuel costs but lack in driving performance. Electric vehicles have their own set of considerations; consumers like that they don’t require gasoline, but are concerned about the lack of recharging stations. Those who would consider buying alternative fuel vehicles are slightly more likely to say it is to save on fuel costs than to reduce emissions.
Americans are interested in public transportation equally for the savings on fuel and for the convenience. Only one in 10 drivers say avoiding congestion is the primary reason they would take public transportation, despite the fact that a third of driving trips in urban areas run into congestion. In aggregate, they experienced more than 4 billion hours of traffic delays in 2010!
Pets
Dogs are the most common pets in America, followed by cats. A majority of Americans say the recession has not impacted their decision to keep a pet, and pet owners’ spending has increased despite Americans’ concerns about their budgets. Many pet owners consider their furry friends as members of the family, which explains their willingness to open their wallets for care and feeding expenses. Some ways in which Americans humanize their pets are keeping photos of their pets on their phone, dressing them up, and even attending birthday parties for pets.
Veterinary bills are the top cost of keeping a pet, and are one instance in which Americans balk at spending. While a few put their pets medical needs ahead of even their own, most pet owners question paying for a necessary medical procedure for their pet that costs more than a thousand dollars.
ENTERTAINMENT, MEDIA & THE DIGITAL LIFE
Entertainment continues to be an item Americans say they are cutting back on. However, that does not mean that they are spending less time with entertainment and media, but that they are finding ways to get it cheap or free.
In fact, consumers spend an ever-increasing amount of time with media, encouraged to do so by the convenience of accessing media on a wide variety of devices.
Accessing Entertainment
Americans watch video on TV sets, but also on computers, cell phones, and other handheld devices. Young and multicultural adults are rapidly embracing non-traditional video viewing because they spend more time than average accessing media outside the home and also because they are more knowledgeable about technology and electronic devices than their older peers. Accessing video via alternative screens has not significantly diminished the time Americans spend with traditional TV.
DVR, video on demand, and online streaming video allow users to time-shift TV programs, and each medium is growing in usage among Americans. While the Web offers a convenient (and often free) means to time-shift, Americans most commonly prefer to watch via DVR or video-on-demand because the program is automatically delivered to their TV rather than a computer.
The Internet continues to be a key entertainment and information medium, particularly among young adults. They go online to catch up on news and culture. Americans are increasingly streaming video and radio from websites. YouTube is still a dominant video site, but as people become more comfortable accessing long-form content online, sites such as Netflix and Hulu are growing in popularity.
Americans are becoming more comfortable paying for digital content as they have successfully bought and downloaded everything from music to TV shows to mobile apps. Trust is an important factor in consumers’ digital media purchases — they feel safer and spend more buying from a company they are confident will deliver what they want.
Newspapers continue to struggle as consumers get their news online, on TV, or even from friends sharing tidbits and links on Facebook. The number of people who read a daily newspaper is shrinking, and nearly half of Americans do not think newspapers will exist in the future because they will become irrelevant.
Computers & Electronics
Americans have become so reliant on tech gadgets — such as smartphones, netbooks, and iPads — that they would feel completely out of touch without them. Four in 10 users say they are connected at all times. Young adults are more likely than older adults to be avid tech device users. However, some people (particularly men aged 25-34) feel they are too connected and need more downtime away from technology.
Hispanics are more connected than ever. Those who are foreign-born and Spanish-dominant are catching up with Americans overall in terms of computer ownership. Bicultural Hispanics are more likely to own a wide variety of devices including cell phones, DVD players, laptops, MP3 players, and HDTVs.
Shoppers are intrigued by 3DTV sets, but few bought them. Americans are still trying to figure out how they work, what content is available for them, and if they would fit into their lives. It is far from a “sure thing” that these devices will truly catch on. The introduction of the iPad made waves in the computing world as millions of Americans snapped them up. Tablet computers are more likely than 3DTVs to see mainstream adoption in the next few years.
Many parents give their children their own electronic devices. Age eight or nine is when they get their first such equipment, such as an MP3 player or a videogame console. When kids reach age 12, most have their own computer and nearly half have their own TV. A majority of parents prefer their child be more mature before having their own page on a social network, saying that should wait until they are 16 or older. Children most commonly get their first cell phone in their teen years as well.
Mobile Media
Mobile phones are nearly ubiquitous in 2010. The number of cell phone-only households continues to rise as consumers ditch their landline and the additional bill that comes with it. The way Americans use their mobile phone is also shifting — they spend less time using it to talk but are sending more text messages. The younger the user, the more texts they send and the fewer minutes they spend talking. Most mobile phone owners use their devices to take pictures.
Not everyone has fully adopted mobile media. Some older Americans stick to a basic, low-cost plan and only use their devices for talking and the occasional text message.
On the opposite end of the spectrum are smartphone owners, who account for about 20% of cell phone owners. Women are nearly as likely as men to own a smartphone. Smartphone owners are more likely than other cell phone owners to use their devices to go online, download apps, listen to music, watch video, and obtain other content and services. Many smartphone owners (including men) use their devices for shopping, whether to make an actual purchase, locate a store, or compare prices when in-store.
Blacks and Hispanics are ahead of the curve using mobile technology. They are more likely than Whites to use their cell phones for shopping activities. Among young Hispanics, half keep in touch with friends by texting on a daily basis, and nearly the same proportion call their friends on their cell phones as often.
The youngest cell phone owners, tweens, use their devices primarily for communication and are less likely to use them to download ringtones or listen to music. As they age into high school and college, they are more likely to download apps, and are willing to pay for them.
Online
More than two thirds of Americans have access to the Internet from home, and most of those have a high-speed broadband connection. High-speed connections are more common as income rises, and less common as age rises.
For most Americans, their first online destination of the day is checking email. About one in 10 first visit a social network, revealing how integral social media has become in Americans’ lives. Americans spend the greatest proportion of their online computer time on social media. On their mobile devices, they spend the greatest proportion of online time with email, followed by web portals and social media.
Most Americans have a profile on a social network. The number of Americans on Facebook is still growing, though at a slower rate than in previous years. MySpace is losing users, but has developed a niche as a social entertainment site. The number of Twitter users is holding steady, while a few Americans are adopting location-based services — a new form of social media that allows them to “check in” at businesses and other locales and find friends nearby.
As Americans spend more time on social media sites, their use of such sites has extended from keeping in touch with friends to “liking” brands and sharing product and brand opinions.
Many also use their social media connection with brands to find out about deals and new products. While they welcome interaction with brands in the social media space, brands must be careful to remain relevant to their audience and not spam their fans.
Gaming is also a key aspect of social media, with many users buying and selling virtual goods — for both real and virtual currency — on these sites. Women and youth are avid social gamers.
For the most part, Americans believe it is safe to buy and sell goods and communicate with others on the Internet. Some remain skeptical of the information they find online, but in general, they feel like savvy Internet users and that they know how to assess the reliability of online information.
Privacy is a constant concern online, though many users are not proactive about it. For example, personal information is the most common type of post to Facebook accounts, yet when the site changed its privacy policies, most users did not update their account settings.
Hispanic Internet use is slowly catching up to that of the rest of the population. For Hispanics, their ability to speak and read English is the most significant factor in their use of the Web. They often prefer to use English-language websites because they have more information and are more comprehensive than Spanish-language websites. Among those who use the Internet, Hispanics name shopping as their favorite online activity.
Teens go online frequently, with most accessing the web daily. They most commonly visit Facebook. As teens grow into adulthood, they continue to communicate with friends online, but their online destinations expand to include more shopping sites. Online safety and bullying is a concern among both high school and college students.
© Copyright 2011, EPM Communications, Inc. May not be reproduced without written consent of publisher.