It's no secret that consumers aren't spending as much as they used to, and they're buying different products as well.
Overspent baby boomers in particular used to be the most brand-loyal of all shoppers. Now, they're perusing the weekly sales flyers like any other bargain hunters and causing grief for small businesses across the country.
“Brand loyalty is waning and comparison shopping is increasing,” says Gordon Hendren, a Toronto-based consultant who spends his working hours closely analyzing consumer behaviour.
“One of the trends that we see is a kind of cocooning, simplifying life and spending less,” says Mr. Hendren, who is president of Charlton Strategic Research, which, along with the Strategic Counsel, has just completed a quarterly survey of shifting consumer attitudes in both Canada and the United States.
Will a “new” consumer emerge through this recession? That's one of the questions Mr. Hendren and his team are studying. They are also looking at how consumer behaviour is evolving, how the environment is playing a role and how brands can engage with buyers.
Mr. Hendren has more than 20 years of experience conducting consumer studies and providing insight, with client experience ranging across such sectors as media, petroleum, financial services and retail. He is also an expert in brand tracking and brand marketing. He is a graduate of the commerce program at Queen's University in Kingston, Ont.
Mr. Hendren joined us earlier to talk about consumer behaviour and its effects on small business.
Dave Michaels, globeandmail.com: Welcome, Mr. Hendren, and thanks for being with us today. We have plenty of questions lined up, so let's dive right in.
First of all, as an expert in consumer behaviour, what kind of general advice are you giving to CEOs today?
Gordon Hendren: Although we see the recovery taking some time (likely a few years), good brands, smart brands, brands with a good point of difference and a value proposition should protect and even gain share.
Today is a time of risk but also a time of great opportunity for their brand and business – this is driven by brand loyalty declining and comparison shopping increasing dramatically, as consumers search for value. The paradox of the current marketplace is that many companies have dramatically cut marketing spending at exactly the time when they should be increasing marketing spending – to defend their position and take advantage of this opportunity. While there is a short term gain from cuts there may very well be a long term consequence. The weaker brands will likely suffer and decline.
Competition is increasing, so focus on your brand’s/company’s point of difference and competitive advantage. If you don’t know exactly what your point of difference is – I strongly suggest identifying it, quickly!
Dave Michaels, globeandmail.com: I’ve heard that this recession came on so quickly and frightened so many people that it has forever “changed” consumers. We’ve seen lots of stories about people cutting back who never thought they would do so, and now they are saying they’re not going to go back to their old ways. Do you think that’s true?
Gordon Hendren: There is no question that attitudes have changed significantly. That said, “forever” is likely an overstatement. Our quarterly tracking study, Consumer Shift, shows a significant pullback in consumer attitudes toward spending continuing and that a quest for value is still very much the current mindset. Also, I do believe in “wealth effect” – meaning that if your investment portfolio is down and/or the value of your house/condo is also down you are less likely to want to spend more. Negative media can also play a role – especially when coming from the U.S., where things are worse than in Canada.
We have noticed some key differences within certain demographics: Ontario has been the hardest hit in terms of attitudes toward spending; women are most likely to say that they are “comparison shoppers”; those 35 and older are most likely to be “price is the bottom line” or “comparison shoppers” segments; those with household income under $50k are most likely to be in the “price is the bottom line” category.
