Consumers trends in time of recession

November 24, 2008

Recession is expected to seriously influence consumer behaviour in the short term, but in the long term, it may have a much smaller impact on consumer trends than expected. Here's an overview of the various recession-related questions posted on www.trendwatching.com:

Will consumers cut down on luxury items?

Of course they will. Expect numerous reports on the (temporary) demise of high-ticket items, except in regions where emerging middle classes still depend on flaunting luxury brands.

So what will happen to the premiumisation trend?

It's still a force, but the focus within premium products will shift towards the useful and comforting, versus the frivolous if not outrageous slant of pre-downturn times.

And one thing to keep in mind, recession or not: one generation's luxury can become another generation's necessity.

Meanwhile, what we will be looking out for is a prolonged appreciation of the golden-oldie trend - no-frills chic - well-designed yet affordable products and services.

Is 'eco' still going to be big?

A: Sure, certain overpriced organic nice-to-haves will suffer, but we'll most likely see a surge in what we've dubbed "eco-cheap": cash-strapped consumers going out of their way to save money on energy bills, motorised transport and other waste-prone, eco-unfriendly activities.

While the environment may not be their first concern, there will be less polluting nevertheless.

Is this a good time to focus on innovation?

Any time is a good time to focus on innovation. If you're doing well, you need to continue to innovate to ward off the inevitable competition, and if you're not doing so well, you're obviously not going to crawl out of your mess by downsizing and sitting still.

So basically, as necessity is the mother of invention, expect to see a whole lot of innovations popping up in the next 12 months as smart people are suddenly forced to give it all they've got, with despair and dwindling resources setting new ways of thinking in motion. The impetus to innovate is every recession's silver lining.

What about entertainment in difficult times?

People will look for diversions, for (affordable) experiences that will make them temporarily forget any kind of misery that has come their way.

Will cocooning or "insperiences" boom? Of course.

Are Microsoft and Sony and Nintendo salivating over staycation-induced game riches? Yup, yup.

And free love?

Anything that is free will obviously be in demand, but "free" business models supported by ad revenues may feel the pain, as ad spending will decrease if companies curb spending

And indulgences?

Big indulgences will be out (they'll be either too expensive or too flashy, or both), small ones will be in, to lighten the hardship. However, frequently occurring small indulgences may take a hit, as total expenditures on those do add up. Think people's daily Starbucks fix. So, the golden trend tip for brands in a downturn? Care about your customers. Deliver. Sympathise. Surprise them. Talk to them.

This is the first part of a series taken from www.trendwatching.com's "the top 15 trend questions".

 

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