Affluent Shoppers Leading Retail Recovery: Survey
According to the L.E.K. Consulting Consumer Sentiment Survey (CSS), affluent consumers — those earning more than $150,000 annually — are optimistic about the economic recovery, with over one-third (39 percent) believing their spending was either materially unaffected by the recession or has already returned to pre-recession levels.
On the other hand, the general population is considerably more cautious, with just 12 percent expecting their personal finances to improve by fall 2010, and 65 percent not anticipating their finances to rebound significantly for the next 12 to 24 months.
L.E.K.’s research further found that the affluent consumer is the only demographic spending more today than before the recession, as well as the only group planning more purchases in the near future, with a 3.5 percent rise expected. The general population, meanwhile, has cut its spending by over 4 percent since the advent of the recession, with no major spending increases looming.
“L.E.K.’s survey findings show that wealthy consumer spending is outpacing the general public significantly and appears to be literally pulling the U.S. out of its recession,” noted Andrew Rees, VP and head of the L.E.K. Consulting Retail Practice. “The distinct affluent demographic underscores why retailers need to truly understand what motivates each customer type. Deep customer segmentation will give retailers the insight to chart a clear course despite hazy market conditions.”
Examining the percentage of high-income individuals who align themselves with various megatrends, the Boston-based global strategy consulting firm’s survey found that the demographic’s rate of participation to be typically more than 7 percent higher than that of the general population. Select findings on key megatrends are as follows:
—The recession amplified the “trading-up” phenomenon as consumers were forced, more than ever, to make choices in their consumption
—“Selective splurging” is now on the rise again as shoppers are increasingly returning to some purchases of higher-end brands
—Consumers have shifted buying habits slightly from price reduction toward quantity reduction since L.E.K.’s October 2009 CSS.
—About 17 percent of the population is in the consumer subset that truly drives organic/natural purchases and is willing to pay more, or go out of their way, to buy such items, but nearly 24 percent of affluent households fall into the organic/natural camp
—Organic/natural was sensitive to the downturn, but consumers “passionate” about the category expect a significant rise in their organic purchases post-recession
—Twenty-one percent of consumers really drive the green product category, but just 10 percent are willing to pay a premium for these items
—Shoppers generally remain skeptical about the validity of many environmental claims
The most prevalent megatrend throughout the recession, however continues to be online shopping. Of the total respondents to L.E.K.’s survey, almost one-quarter said that their online shopping increases every year. The survey further discovered that the Web is a big influence on in-store purchases.
“Online shopping continues to be an important focus for retailers, and our survey found that one-quarter of consumers’ purchasing decisions in physical stores are influenced by their online experience,” observed L.E.K. Consulting VP Dan McKone. “Consumers are also emphatic that they expect consistency across various elements of the multi-channel merchandising. In particular, we found that retailers that don’t think through the implications of pricing inconsistency across the store vs. online channels risk alienating customers.”
The research also found that the influence of social media on what consumers buy is increasing. Consumers on social networks who see product recommendations from friends plan to buy those items 12 percent of the time. The best way to get a response from consumers, however, is still by motivating them to opt in to a retailer’s continuing communications campaign. According to the survey, consumers were more apt to respond to an e-mail from a retailer, if they’ve already joined that retailer’s mailing list (26 percent), than to an e-mail message forwarded by a family member or friend (21 percent). Retailers that can persuade shoppers to join their online communities, perhaps through promotions or other incentives, can forge a powerful connection that may foster long-term sales.
The spring 2010 L.E.K. Consulting Consumer Sentiment Survey (CSS), the fourth carried out by the company, polled 2,000 U.S. households in April 2010. Additional findings from the survey are available at www.lek.com/About/ConsumerSentimentSurvey.cfm.
On the other hand, the general population is considerably more cautious, with just 12 percent expecting their personal finances to improve by fall 2010, and 65 percent not anticipating their finances to rebound significantly for the next 12 to 24 months.
L.E.K.’s research further found that the affluent consumer is the only demographic spending more today than before the recession, as well as the only group planning more purchases in the near future, with a 3.5 percent rise expected. The general population, meanwhile, has cut its spending by over 4 percent since the advent of the recession, with no major spending increases looming.
“L.E.K.’s survey findings show that wealthy consumer spending is outpacing the general public significantly and appears to be literally pulling the U.S. out of its recession,” noted Andrew Rees, VP and head of the L.E.K. Consulting Retail Practice. “The distinct affluent demographic underscores why retailers need to truly understand what motivates each customer type. Deep customer segmentation will give retailers the insight to chart a clear course despite hazy market conditions.”
Examining the percentage of high-income individuals who align themselves with various megatrends, the Boston-based global strategy consulting firm’s survey found that the demographic’s rate of participation to be typically more than 7 percent higher than that of the general population. Select findings on key megatrends are as follows:
—The recession amplified the “trading-up” phenomenon as consumers were forced, more than ever, to make choices in their consumption
—“Selective splurging” is now on the rise again as shoppers are increasingly returning to some purchases of higher-end brands
—Consumers have shifted buying habits slightly from price reduction toward quantity reduction since L.E.K.’s October 2009 CSS.
—About 17 percent of the population is in the consumer subset that truly drives organic/natural purchases and is willing to pay more, or go out of their way, to buy such items, but nearly 24 percent of affluent households fall into the organic/natural camp
—Organic/natural was sensitive to the downturn, but consumers “passionate” about the category expect a significant rise in their organic purchases post-recession
—Twenty-one percent of consumers really drive the green product category, but just 10 percent are willing to pay a premium for these items
—Shoppers generally remain skeptical about the validity of many environmental claims
The most prevalent megatrend throughout the recession, however continues to be online shopping. Of the total respondents to L.E.K.’s survey, almost one-quarter said that their online shopping increases every year. The survey further discovered that the Web is a big influence on in-store purchases.
“Online shopping continues to be an important focus for retailers, and our survey found that one-quarter of consumers’ purchasing decisions in physical stores are influenced by their online experience,” observed L.E.K. Consulting VP Dan McKone. “Consumers are also emphatic that they expect consistency across various elements of the multi-channel merchandising. In particular, we found that retailers that don’t think through the implications of pricing inconsistency across the store vs. online channels risk alienating customers.”
The research also found that the influence of social media on what consumers buy is increasing. Consumers on social networks who see product recommendations from friends plan to buy those items 12 percent of the time. The best way to get a response from consumers, however, is still by motivating them to opt in to a retailer’s continuing communications campaign. According to the survey, consumers were more apt to respond to an e-mail from a retailer, if they’ve already joined that retailer’s mailing list (26 percent), than to an e-mail message forwarded by a family member or friend (21 percent). Retailers that can persuade shoppers to join their online communities, perhaps through promotions or other incentives, can forge a powerful connection that may foster long-term sales.
The spring 2010 L.E.K. Consulting Consumer Sentiment Survey (CSS), the fourth carried out by the company, polled 2,000 U.S. households in April 2010. Additional findings from the survey are available at www.lek.com/About/ConsumerSentimentSurvey.cfm.