Is there a fundamental shift in the way we spend and save today? I just read a study that stated that after this recession ends Americans will spend about 86% of their pre-recession level. As I read this, I could not help but realize that this change is starting to take hold of the country and will cause some companies to grow and become great while other companies will miss the train and fall apart. No matter what, it is clear that there is a fundamental change occurring in how and why Americans are buying goods today.
The Facts: Personal debt had doubled in a decade and ended at $124,000 per household in July 2009. That is a large number, and it will take years to work down this debt. With this said, the only logical thought is that people's thriftiness and spending habits have changed. We will see new behaviors over the next few years. Are you ready for these changes? Are you changing? How about your business?
The impact of these changes will affect everything from the homes and cars we buy to how we spend money at the grocery store or for entertainment. One of the fundamental shifts we are currently seeing in the marketing world is that people are shifting their thought process away from wants to a focus unlike before on needs. Are you marketing to this shift? Does your company or product fill a need not a want? This is a very important question.
When people spend they are looking for value. Many businesses and individuals have made a decision to be more frugal relative to this economic crisis. People are looking for value either through specials, coupons or close outs. When the upturn of the economy starts, be it a few months or even five years, people will not return to old spending habits. The shock and scare of this crisis has developed habits that will stick!
Many of us have no recollection of the Great Depression, but history tells us that a crisis like the Great Depression does create change. Many of us remember seeing parents or grand parents who was affected by the times they had during the economic problems of their day. It develops almost overnight a fundamental shift in how people think and process value. It will be more important than ever that you find affective marketing practices that will fill the needs of customers. What is your business doing today to fill the need of your customers and to provide them value?