Consumer Behavior Changing
By George Anderson
Some got the wake up call before Hurricane Katrina. Now everyone’s gotten it. Consumers are changing their shopping behaviors and just how they are going about their business is important for retailers looking to gain advantage in the current economic environment.
According to a study conducted by ACNielsen in June and July, well before Hurricane Katrina, consumers were combining errands, going out to eat less often and sticking closer to home as a result of higher gas prices.
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What impact, if any, has higher gas prices had on your household’s driving and spending habits? |
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Impact |
Total |
Poor |
Getting By |
Living Comfortably |
Affluent |
|
Trying harder to combine errands/trips |
61% |
54% |
64% |
61% |
52% |
|
Eating out less often |
31% |
31% |
33% |
31% |
23% |
|
Doing more things at home rather than going out |
30% |
32% |
32% |
30% |
24% |
|
Switching to lower priced gas stations |
30% |
31% |
29% |
29% |
27% |
|
Reducing spending in other areas to small degree |
26% |
20% |
25% |
28% |
24% |
|
Shopping at more supercenters where everything we need is in one store |
22% |
23% |
25% |
22% |
15% |
|
Using coupons more often |
20% |
23% |
22% |
20% |
14% |
|
Buying less expensive brands of grocery items |
17% |
20% |
21% |
16% |
10% |
|
Using a lower grade of gasoline |
16% |
19% |
18% |
15% |
12% |
|
Reducing spending in other areas to a great degree |
10% |
15% |
12% |
10% |
5% |
|
Buying larger, economy size grocery item |
10% |
10% |
10% |
9% |
7% |
|
Shopping more at warehouse club stores where everything we need is in one store |
9% |
6% |
7% |
9% |
9% |
|
Shopping more on the Internet rather than visit stores |
5% |
3% |
4% |
4% |
7% |
|
Using public transportation more |
3% |
4% |
3% |
3% |
3% |
|
Considering/using a grocery home delivery service |
1% |
1% |
1% |
0% |
1% |
|
None of the above/no impact on driving and spending habits |
19% |
10% |
12% |
17% |
26% |
While the impact consumers felt from rising gas prices was proportionate to their household income, even affluent consumers were making adjustments. For example, 52 percent of
affluent consumers said they were trying harder to cut down on the number of trips they made by combining errands. Only 26 percent of affluent consumers said the high price of
gas was having no effect on their behavior.
In a released statement, Todd Hale, ACNielsen senior vice president, Consumer Insights, addressed the further price increases since the survey was conducted: “With the added economic uncertainty created by the disaster in New Orleans and other parts of the Gulf Coast, you can be sure that there are even more people now looking for ways to conserve fuel and reduce overall spending.”
Hale believes the reality of the post-Katrina marketplace means retailers and consumer packaged goods companies will need to make adjustments.
“The most important need right now, of course, is for continued donations of products and cash. But there will be a longer-term impact as well, with opportunities for one-stop-shop retailers like supercenters and warehouse club stores to win the ongoing business of customers who are visiting their stores for the first time and for supermarket operators to play up the convenience of their store locations and the value of their take-home meals. Lastly, the fact that many consumers are doing more at home should spell opportunity for manufacturers whose products can enhance the at-home entertainment experience,” he said.
Moderator’s Comment: What impact, if any, has higher gas prices had on your household’s driving and spending habits? What does this mean for retailers
who want your business?
ACNielsen’s survey was conducted among 37,000 members of its Homescan consumer panel. –
George Anderson – Moderator
After 99 hours of watching nonstop CNN and the devastation in the gulf region, my behavior has changed. That new home I had been planning for seems an unnecessary and dangerous expenditure. It’s a concern that the cost to heat a bigger space could spiral out of control. The state of the economy and the deficit spending of the current administration only fuel the pessimism.
Though affluent by any measure, the cost of fuel has eliminated unnecessary trips. I know the cost of goods will rise as the cost of transporting them increases. So, what will the affluent buy? I’ll still buy clothing, but I’ll buy higher quality, and less of it. I’ll use frequent flyer points for travel, or do less of it. Some of the money saved will go to charity, but I will save more. We will eat at home more often and ride out the storm.
Retailers should embrace this opportunity to train their shoppers to shop big. Stock up trips should be encouraged. Why not print ads, posters and even direct mail that illustrate the savings from fewer trips (and more purchases per trip)?
With that message in place, any methods retailers can use to further help shoppers by reminding them of items they might forget while visiting their store, like using their purchase history to prompt them to replenish items, will help both shoppers save money (gas dollars) and improve sales for the retailer.
Meal ideas can contribute by helping shoppers who may be tentatively returning to meal preparation to go there with a plan and confidence. Wednesday might be owned by Prince Spaghetti, but that leaves 6 other days up for grabs and creative marketing ideas.
High gas prices and beautiful Colorado weather are conspiring…I am being forced to abandon my car and take my motorcycle more places (at least that’s the reason I give everyone). I have also reduced my spending on groceries and clothing considerably (can only take home what fits in my saddle bags) and restaurant-going is off the list (helmet hair). Didn’t see this on the list – ha!
Wal-Mart often complains that higher gas prices really hurt their less affluent customers, but their one-stop-shop (supercenter) feature must be an incredible benefit to gas-saving consumers, able to do many types of purchases in one location. So Wal-Mart, stop with the excuses, and start introducing the internal clothing boutique concept.
Driving is a daily habit and daily habits are hard to change. Gas prices in the NY/NJ area peaked around Labor Day weekend and then declined a bit. Many people would love to buy a hybrid, but the choices are few. “Stocking up” is a great opportunity theme for advertising. So is “go online” to save a trip. Many mall leases require participation in periodic mall-group ads. In the past, these ads (“Shop at these 65 great stores at the Fashion Mall”) earned no additional traffic whatsoever. Since the spending is required, perhaps the mall retailers could get together with the mall managements and a brilliant ad agency, to craft COMPELLING “do all your shopping here and save trips” messages. The shame of it is that the poorest people, who can least afford high gas prices, often don’t have the cash to make a big stock-up trip.
I agree with David and Ryan. Those who already suffer will suffer most. I don’t think the majority of people will truly change their habits until this winter when they begin to see their heating bills.
I will admit that certain of my friends and colleagues have made substantial changes already as a result of the increased gas prices. However (coincidence?), as it happens, they all drive SUV’s.
Just wait till the heating season!!! Anywhere north of the Mason Dixon line, this is going to have a multiplier effect. In a few weeks, the first cold weather will be sliding in, and utility and fuel bills for heating will drop into consumers laps in late Octrober – just in time to put a real spike in holiday spending plans, I suspect.
At first, the price of gas was on my mind a lot. I was riding my bike to the post office instead of driving. But now I just accept the higher prices. I just got back from Canada and the price is equal to about $4 a gallon there. No one seems to mind. I don’t think we are going to see any driving habits change significantly unless the price reaches $5 or $6 a gallon. It’s like health insurance. It is what it is and we will just pay the asking price because we need it. As for retailers, high gas prices will probably help thin the herd of weeding out weaker retailers as people make few shopping trips, limiting their trips to only the best retailers. For some retailers, this could be a blessing.
At the risk of flowing against trend in a country where the President has just learned there are poor people by watching television, let’s face facts. Higher gas prices also mean higher utility costs. Affluent Americans complain as they fill their Hummers and poor Americans walk. Affluent Americans complain as they turn up the air conditioning and poor Americans sweat and freeze. It’s a shame it takes a fuel hike and a hurricane to make us realize where we live and how little some of our fellow citizens really have. The affluent are inconvenienced. The poor suffer.
One other idea: help people form shopping trip car pools. Elderly people who’ve stopped driving often go shopping with their still-driving neighbors. It would be neat if malls and stores had message boards (physical and/or on-line) for people to go car-pooling for shopping trips. Many people like shopping as part of a social activity anyway. This could be organized by church and social groups, too, like senior centers.
Here’s a purely anecdotal contribution from a place that has also noticed higher fuel prices for gas and utilities. I live in a village with several small groceries, a butcher and a pharmacy within walking distance but no supermarket for less than 4 miles and no bigger ones for less than 6 miles. What I have noticed in the past few months is: (a) a conspicuous increase in traffic through the village with commensurate parking problems but (b) far more home deliveries of groceries by the three supermarkets serving our area. The one that I use includes a symbol on its website to help you choose a time when they will be in your area already, something I find particularly sensible to keep fewer vehicles on the road. The two seemingly contradictory behaviour patterns don’t lead me to any easy conclusions however. I don’t think the local traffic indicates that stores are taking business away from others further afield but possibly the home deliveries are changing the way people shop (it’s easier to bulk buy non-food items if you don’t have to carry them yourself).
Comparing the comments to the survey is quite surprising. Comparing the headline to the survey results is equally surprising as Jeff Weitzman points out.
There is no real movement at most levels and even across income levels even in the ‘combine trips’ results.
I don’t see the survey as supporting the headline. With the exception of the “combine errands” question, there’s hardly a “movement” toward conserving gas. And with the exception of the truly affluent, there’s not much difference across income levels. I’m afraid it will take the cumulative effects of higher energy costs to really impact people’s standard of living, and by then the cost of gasoline will be the least of people’s worries.
When you see expensive European, and Japanese cars lined up at gas pumps of Sam’s Club, and Costco. Something is up!
If the rich are conserving, what are the less fortunate doing (Mr. Bush)? Hmmmmmmmmm