14 DAY TRIAL // When the global economic downturn began, it changed the way people went about purchasing what they needed. Emphasis was again placed on buying only the necessary things, rather than spending money on useless things. Experts say that will take years to change.
In the years leading up to the recession, consumers, especially in the United States, were used to spend a lot of money on luxury items, on keeping up with the latest technologies, and other things of that nature.
Now, they were brought down to only spending money on things they actually needed, which caused a shift in the way the American economy worked.
One of its main staples was creating artificial demand for products, via advertising and elements pertaining to soft culture and group inclusions.
But those things no longer work now, as people struggle to manage their money so that they can pay their mortgages, and still put some food on the table.
This is why the National Retail Federation (NRF) estimates that US citizens will take several years before they go back to purchasing things they don't actually need.
Under these circumstances, the only thing left for retailers to do is start micromanaging their products, and to set in place even more promotions, especially during the upcoming holiday season.
“The shopper's mentality has shifted, and, in some ways, it could be permanent. Some industry experts are quipping that the recession is over but nobody has told the consumer, as yet,” said in a recent interview with Sales-Fax News Mike Gatti.
He is the executive director of the NRF RAMA (Retail Advertising and Marketing Association) division. The official explained that people realized that what they wanted was not necessarily what they needed.
When all the money disappeared, they started focusing again on their absolute necessities, in order to save as much as possible.
“Whenever you have an economic downturn like this, you see cocooning: eating and cooking at home, movie and game nights at home, so [consumers] start to look at what they can do for the whole family,” Gatti explains.
As such, focusing on promotions that target the entire family could be the main thing this year's holiday season, the analyst adds. Retailers who do that may gain more than those who stick to classic types of promotions. LiveScience reports.