Posts Tagged ‘consumer spending’

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More Men Wearing Makeup

Thursday, September 2nd, 2010

In the old days, men used wax and powder to perfect their complexions. But today’s man is going for something a little more understated…

  • Despite a social norm that categorizes makeup as “for women only,” men are becoming more comfortable shopping for concealers, tinted moisturizers, and specialized cleansers and lotions.
  • Instead of playing up their features to enhance beauty the way women do, men are mostly interested in hiding dark under-eye circles and evening out their complexions.
  • There are many new cosmetics companies specifically targeting men, though some customers are confident enough to shop at Sephora or other woman-centric beauty shops. The term “makeup” still has an effeminate stigma, so retailers and customers tend to refer to men’s beauty products as “cosmetics.”

Facts & Figures

  • In 1997, Americans spent $2.4 billion on men’s grooming products; in 2009, that number rose to $4.8 billion.
  • In skin care alone, sales rose from $40.9 million to $217 million in the same period.
  • 4Voo sells “Confidence Corrector” for $34, and “Lash and Brow Styling Glaze” for $23. KenMen sells “guy-liner” for $22, and tinted lip balm for $25.

Best Quote

“There is a little bit of that stealth makeup thing going on, where you’re not slapping foundation onto your face but as part of your other routines — it sort of creeps in.” – Jason Chen, Grooming Editor at GQ

More Concerns About The Economy

Wednesday, August 11th, 2010

The U.S. is still slowly recovering from the worst recession since the 1930s.

  • The economy has now grown (slowly) for four straight quarters.
  • The slow economy growth has made little impact on the unemployment rate.
  • New home construction, imports, and business investments all increased in the second quarter.
  • Consumer spending, which normally accounts for 70% of U.S. economic activity, didn’t rise as much as expected.

Facts and Figures

  • The current unemployment rate is 9.5%.
  • While imports increased by 28.8%, exports increased by 10.3%, creating a trade deficit.
  • Business investment increased by 17%, which was the largest increase since the beginning of 2006.
  • New home construction increased 27.9%.

Consumer Spending Slows Further During Spring Quarter

Monday, August 9th, 2010

The United States is on a slow road to economic recovery that gets longer and longer as consumers spend less.

  • Sluggish consumer spending and stagnant personal incomes reflect a slow economy this spring.
  • Experts believe that economic growth will lose further momentum in the second half of the year as high unemployment, insecure consumers and renewed troubles in housing continue to plague recovery.
  • The rate of economic growth in the United States is about half the pace of what it normally is for a country coming out of a recession.

Facts & Figures

  • Consumer spending accounts for 70% of total economic activity.
  • The GDP slowed to an annual growth rate of 2.4% in the April-June quarter.

Consumption Gap Widens Between Haves and Have-Nots

Thursday, November 19th, 2009

While wealthier American shoppers have returned to patronizing high-end department stores, middle class consumers struggle to afford basics at Walmart.

  • Consumers at all income levels are focused on the value of their purchase and on not overspending.
  • Luxury chains report shoppers buying items such as shoes and dresses, while discount stores say their consumers are focused on food and socks.
  • Shoppers focused on saving in these economically tight times cannot afford to purchase items outside of the bare essentials.

Facts and Figures

  • The wealthy reigned in their spending most severely during the financial meltdown last fall.
  • Walmart has had to lower their prices to encourage their regular shoppers to continue buying.
  • Nordstrom’s third-quarter profit rose as sales improved compared with 2009.

Best Quote

“I used to consider shopping enertainment, but now I don’t think it’s enertainment.” – Patricia Murnane, Shopper and Risk Manager from New York

Buying Shoes Apparently The Thing To Do In A Recession

Tuesday, November 10th, 2009

Shoes have been selling increasingly well despite the recession, due to what analysts are calling “frugal fatigue.”

  • While other retail sales have faltered, shoes are increasingly weathering the economic storm.
  • According to analysts, shoes cost less than other items of clothing (even in a good economy), so more people can afford to spend on shoes regardless of their size or economic situation.
  • Shoes are considered more of a necessity than handbags, beautiful dresses or nice suits. And shoes wear down and need to be replaced more quickly than most articles of clothing.

Facts & Figures

  • Shoe sales were at $1.5 billion in October 2009, highest since October 2006.
  • Sales increased 7.9% compared to one year ago.
  • J.C Penney, Dillard’s, and other major retailers cite shoes as one of their best-selling product categories.

Best Quote

“Shoes democratize fashion. You probably can’t buy a Zac Posen dress if you wear a size 14, but you can buy a pair of Jimmy Choo shoes.” – Kathryn Finney, Writer for the Budget Fashionista blog

A Different Kind Of Credit Crunch

Friday, October 9th, 2009

Pay now or pay later? In a bad economy, more consumers are choosing to feel the effects of their spending right away.

  • In a significant shift in credit-happy American spending habits, people are beginning to use their debit cards more than their credit cards to pay for purchases.
  • The recession has most consumers trying to curb their spending, which the immediate monetary loss of a debit card transaction can make easier. People are also shopping less for the big-ticket items that are usually paid for with credit, but they continue to use debit for everyday purchases such as groceries.
  • The drop in credit card transactions may also have something to do with recent legislation, which had the effect of credit card companies lowering limits and raising fees – and making themselves less attractive to the struggling shopper.

Facts & Figures

  • According to the Federal Reserve, total revolving credit went down $6.1 billion in July.
  • Both Visa and Mastercard saw debit card transactions increase and credit transactions decrease in the first part of 2009.
  • In the past 15 years, debit card transactions have grown to represent more than 50% of all non-cash transactions.

Best Quote

“People are managing their money in a different way. You clearly have a situation where those people who have jobs are exhibiting recession anxiety and they are making more debit transactions.” – David Robertson, the Nilson Report (which tracks credit card industry)

Plunging Prices Follow The Crash

Monday, October 5th, 2009

Times are good for bargain-hunters, but a price-slashing culture could be disastrous for retailers and their employees.

  • Prices around the country are dropping in a retail campaign to win back buyers who put their wallets away when the stock market crashed and thriftiness became the norm.
  • Shoppers are staying away primarily because they’re broke, but also because the consumer culture has changed since 2007: conspicuous consumption just isn’t as okay as it used to be.
  • Because consumers are now holding out for the discounts they know desperate retailers will offer, companies are forced to cut prices even as their profit margins shrink. Lower prices mean lower profits, which often translates to hiring freezes and layoffs. This is the same cycle that affects the Japanese economy, which has been battling deflation for decades.

Facts & Figures

  • 70% of the U.S. economy is made up of consumer spending, but following the stock market crash in 2008, total household wealth decreased by 11% in less than six months.
  • On average, prices have decreased by about 20% in the hotel industry and more than 30% in the real estate market.
  • The Consumer Price Index dropped 1.5% between September 2008 and September 2009 – the largest decrease since 1950.

Best Quote

“This is the new normal. We aren’t going back.” – Donald Keprta, President of Dominick’s (a supermarket chain in the Midwest)

Gucci’s Red And Green Racing Stripes Led It Straight To 1st Place

Friday, September 25th, 2009
Did your favorite designer make the top 5?
  • Nielsen surveyed consumers around the world about their favorite luxury brands. Gucci made first place, followed by Chanel, Calvin Klein, Louis Vuitton, and Christian Dior.
  • The study attributes much of Gucci’s success to CEO Mark Lee. Since he became president in 2004 and then CEO in 2005, sales have soared.
  • Designer goods were found to be most desirable in emerging markets where consumers also hold knock-offs in very low regard. North Americans were found to be more indifferent to authenticity of designer-labeled products.

Facts & Figures

  • 1/3 of consumers in the United Arab Emirates and Hong Kong buy designer brands, compared to only 7% of North Americans.
  • On North Americans’ lack of interest in luxury brands, 35% said they wouldn’t want to buy designer goods even if cost were not an issue.
  • More than ¼ of North Americans said they were fine with fakes while only 8% of Asians were comfortable with the idea.

Best Quote

“That red and green stripe is some of the most iconic luxury branding ever created, and people want a piece of it.” – Michael Macko, Fashion Director at Saks Fifth Avenue, on Gucci

Spend Money, Be An Activist?

Thursday, September 24th, 2009

You can affect change in all sorts of ways. But lately, people are using their wallets to make their voices heard.

  • In larger numbers than ever before, consumers are considering the environmental and social aspects of the things they buy – not just the price.
  • Consumer demand has been driving a transformation by traditional companies to become more sustainable, and often more profitable, in the way their operate their businesses.
  • Even though much progress has been made, transparent and authentic sustainable business practices are still not the norm. Increasingly vocal demand by consumers for sustainable products will continue to drive this “revolution” into all areas of business.

Facts & Figures

  • In a TIME poll, 40% of people reported buying a product because of its social or environmental benefits.
  • Socially responsible investment (SRI) funds have increased in number from 55 in 1995 to 260 today – they manage 11% of all money invested in US markets.
  • In 2007, a Goldman Sachs report found that companies that emphasized sustainability would outperform the financial market.

Best Quote

“We have always known that heedless self-interest was bad morals, we know now that it is bad economics.” – President Franklin D. Roosevelt

Do Rational People Really Exist?

Tuesday, August 18th, 2009

If you’ve ever wondered why you gravitate towards expensive things, here’s a possible reason. Obviously, it’s not the whole story (but it sure gives you a good excuse).

  • Standard economic theory is based on the assumption that consumers will always act rationally (if it’s more expensive, you’ll buy less, etc.), but psychologists and behavioral economists have been continually proving that this rule is often not followed.
  • They argue that just because there is a price increase on a pair of jeans, it doesn’t mean you will now buy fewer pairs – you might actually buy more. Their studies show that people receive more pleasure from items they think are more valuable because they’re expensive (even if they aren’t better quality).
  • On the other hand, real-world experimentation has shown that maybe this rational consumer does exist. Some decision making (like choosing which food to eat) is really about basic economics – your preferences aren’t going to change with pricing tricks.

Facts & Figures

  • Consumers sometimes react “irrationally” by economics standards – when the price of a good increases, sometimes people want to buy more.
  • In an experiment, reward centers of the brain lit up more for a $100 bottle of wine versus a $10 one. It was the same wine.
  • In an experiment on food though, people would not want a more expensive entree even if they wouldn’t have to pay for it. They wanted the food they liked – their preferences and rational economic thought won out.

Best Quote

“Maybe, sometimes, old-fashioned economics is just about right. Maybe when it comes to food, people do have reasonably stable preferences. Some people like shrimp and some don’t, even if it’s worth a lot of money.” – Dr. Moses Shayo, Hebrew University of Jerusalem

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