A new report released by PricewaterhouseCoopers titled The New Consumer Behavior Paradigm: Permanent or Fleeting? says that Gen X and Y will pave the way to economic recovery. In the last two recessions, it has been the baby boomers that have led the US out of a downturn. However, according to the report, Boomers are not at the forefront of the economic recovery because the recession has diminished their savings and retirement accounts, reducing their ability to spend.
The report looks at how consumer spending has changed over the last two years. When the economy first hit rock bottom, consumer spending halted and then consumers jumped into a frantic, bargain-seeking mode, purchasing only those items they truly needed. As the nation shifts into recovery mode, retailers and packaged-goods makers are anticipating the needs and behaviors of Gen X and Y. These generations are increasingly seeking online and mobile coupons on their iPhones and other smartphones, comparison shopping sites, and loyalty and rewards programs. Some retailers, such as Gap Inc. and Saks Fifth Avenue, have reward programs in place for their cardholders, offering coupons and rewards points towards future purchases in their outlets. In my opinion, this is a smart way for retailers to get repeat customers. During the initial purchase, most people are likely only buying items they truly need, and if they are getting a discount, consumers might splurge for additional items.
Despite Gen X and Gen Y having less savings income (is it savings or income?) to spend, these generations seek instant gratification and command the latest gadgets. Retailers who adopt their strategies to the demands of the Gen Xers and Gen Yers will be ahead of the curve and reap the most benefits. To be successful, one must demonstrate that “want to have” items are “must have” items, despite the nation being in a recession shopping mode.