Baby boomers led the U.S. out of a downturn in the last two recessions, but this time around, it will be Gen Xers and millennials paving the way to economic recovery, according to a new report issued by PricewaterhouseCoopers today.
The study -- called “The New Consumer Behavior Paradigm: Permanent or Fleeting?” -- looks at how consumer spending has changed in the last two years. As the nation shifts into recovery mode (February’s unemployment rate held steady at 9.7 percent, per Department of Labor stats), retailers and packaged-goods makers can expect the emergence of a more cost- and value-focused consumer. This consumer is also less likely to be driven by “rampant deal-seeking,” the study found.
When the economy first hit rock bottom, cash-strapped consumers jumped into a frantic, bargain-seeking mode, said Lisa Feigen Dugal, PricewaterhouseCoopers’ U.S. retail and consumer practice advisory leader. Now, that intense focus on meeting budgets and saving any additional cash “will give way to more deliberate and purposeful” spending, Feigen Dugal said.
Baby boomers, however, will not be at the forefront of the economic recovery. That’s because the recession has eaten into this demographic’s savings and retirement accounts, reducing boomers’ ability to spend, Feigen Dugal explained.
The shift is an opportunity for marketers to court Gen Xers and Gen Yers via mobile technologies -- including coupon applications, recipe and grocery shopping tools, and comparison-shopping sites, Feigen Dugal said. (Digital couponing is at an all-time high, with the former surpassing print or newspaper coupons by a factor of 10 to 1, per Coupons.com.)
Though Gen Xers and Gen Yers may have less savings income to spend, the latter is “entering its peak earning years,” while millennials have a higher propensity to spend their dollars, Feigen Dugal said. In addition, millennials tend to embrace the latest mobile technology much quicker. Advertisers can now run couponing offers on iPhones and other smartphones.
While there is now more wiggle room for discretionary purchases, the recession has left a permanent mark on shoppers of all ages. The study found that consumers are more likely to take into consideration things they “truly need.”