Trends in consumer spending and purchasing habits are an important indicator as to the state of the economy. These trends also influence how companies do business and, ultimately, the choices available to shoppers. With the emergence of the Internet as a global marketplace and resource tool, consumer purchasing habits have been significantly affected, and surveys, including Gallup's August 2010 survey, show that shoppers are concentrating their spending on necessities as opposed to discretionary purchasing.
The U.S. Department of Labor's Consumer Expenditure Survey program provides information on the spending habits of American consumers. This includes information on their income, expenditure and consumer unit characteristics. A family or individual is known as a consumer unit. As of 2011, the latest figures available are for 2009. For this period, average annual expenditure per consumer unit fell by 2.8 percent. This fall was larger than the 0.4 percent decrease in prices in 2009, as measured by the average annual change in the Consumer Price Index. Specifically, spending on housing fell 1.3 percent, and spending on transportation dropped 11 percent, largely contributing to the 2009 downturn in overall spending. Of the major expenditure components, the only one to rise was health care expenditure, which rose 5 percent. Of the other major components, personal insurance and pensions dropped 2.4 percent, food fell 1.1 percent, apparel dropped 4.2 percent and entertainment dropped 5 percent.
There are essentially four basic types of purchasing behaviors, which are based on the type of products being bought. Complex buying behavior is when the buyer seeks detailed information before the purchase of an expensive item, such as a car or media entertainment system. Variety-seeking behavior happens when buyers shop around to experiment with different goods. Habitual buying behavior accounts for the regular purchasing of items such as newspapers and the same types and brands of food items. Dissonance-reducing buying behavior occurs when a buyer is highly involved with the purchase of the product because the purchase is infrequent or very expensive, such as a piece of art or an antique, and not because there is a lot of choice or information to compare, as with complex buying behavior.
Cash Versus Cards
The government's financial reform bill has also made differences in the way consumers are paying for goods and services. Credit card fees and minimum purchases and convenience fees being imposed by some retailers are seeing consumers increasingly resort to debit cards and cash. Some banks are also offering rewards for check and debit card usage, which is influencing consumer payments.
As of March 2011, Walmart is the world's largest retailer, and its Chief Executive Officer, Eduardo Castro-Wright reported that credit purchases had been decreasing rapidly since the first quarter of 2007. He said that customers had dramatically changed their buying habits and were living from paycheck-to-paycheck and that stores were seeing increased sales around traditional pay days. He went on to state that the stores had seen a rise in purchases of basic staples instead of discretionary items and that shoppers were turning away from brand names, in favor of cheaper generic store brands.
According to the 2010 Chrome Consumer Survey, necessity is currently the prime cause for the purchase of new vehicles, and in 2010, some 79 percent of consumers purchased a new or used car because their existing vehicles were old and unreliable and not simply because they wanted a newer or different model of car, in comparison to 68 percent in 2009. The survey also found a reduction in dealer and brand loyalty. A massive 83 percent of survey respondents said that they shopped online for a vehicle before making a purchasing or leasing decision.
- Bureau of Labor Statistics; Consumer Expenditures; 2009
- F&I and Showroom; Consumer Buying Habits Changing, Survey Says; October 4, 2010
- Learn Marketing: Consumer Buying Behavior
- "USA Today"; Money: Wal-Mart Sees Shifts in Shoppers' Buying Habits; Chris Woodyard; October 24, 2008
- Gallup: Consumer Spending Across All Income Groups Down in August; Dennis Jacobe; September 9, 2010
- Mint: http://www.mint.com/blog/trends/interchange-fees-5182010/; Matthew Amster-Burton: May 18, 2010
- Photo Credit Jupiterimages/Polka Dot/Getty Images
German Consumer Buying Habits
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