BOSTON, MA--(Marketwire - Jun 21, 2011) - Despite talk of a recovery, consumers feel more apprehensive about the future than they did before the downturn, according to a new report published today by The Boston Consulting Group (BCG). In the U.S., 57 percent of respondents said they have been personally affected by the downturn -- up 8 percentage points from last year. Europe saw a 6 percentage point increase.
BCG's 2011 global report on consumer sentiment, "Navigating the New Consumer Realities," which includes a supplement on individual countries ("Consumer Dynamics in Flux Around the World"), finds that anxiety is on the rise everywhere, but confidence is closely tied to the economy of specific countries. Nearly 70 percent of Italians say they feel anxious about the future, whereas Germany is the only country with a significant decline in anxiety.
These emotional responses are directly affecting spending behavior. "Consumers are trading down and purchasing more private-label products because they feel it's important to get a good deal -- not necessarily because they can't afford the price," notes Catherine Roche, a Toronto-based partner and coauthor of the report. "Trading up has shifted from conspicuous to 'conscientious' consumption," adds Patrick Ducasse, a Paris-based partner and another coauthor.
But attitudes toward spending are different in emerging markets, where many consumers plan to spend more this year: 36 percent of Chinese respondents and 19 percent of Indians said that they plan to increase spending. "This reflects a widening gap between the developed and emerging economies and underscores the importance of companies de-averaging their markets," notes Carol Liao, a Hong Kong-based partner and report coauthor.
New Trends in Consumption
Although natural disasters and political turbulence have taken a toll on consumer confidence this year, they aren't the only factors bringing about change in consumers' spending habits. For the past three to five years, BCG has been tracking four of the most important developments in the consumer industry: the increasing relevance of new markets, changing shopper demographics, the rise of new shopping channels, and the shift in values associated with spending. Among the most significant findings this year:
New Markets. Much of the global growth in consumption will come from emerging markets over the near term. But companies need to understand that consumers can differ significantly across emerging-market nations and even within a single country.
New Demographics. The surge in the number of seniors, urban dwellers, and women in charge of family spending is transforming the entire value chain, from product and service innovation to marketing and sales. This year, we found that women feel particularly underserved by financial services.
New Channels. In most developed countries, more and more consumers are accessing the Internet on their phones. In the U.S., more than half of our respondents said they use the Internet to find information on travel services, computers, and financial services. Consumers are also relying on their own or other people's experiences when they make purchase decisions. Nearly a quarter of respondents in the U.K. said that they use social media frequently for product recommendations, although offline word of mouth is the most trusted source of information for 72 percent.
New Values. Consumers are increasingly interested in green products that are healthy, safe, and good for the environment. Trading up is also alive and well in many markets, but for reasons that differ from those of the past. Consumers are becoming less attracted to brands as status symbols and more interested in getting value for their money in the form of affordable emotional or functional benefits.
By focusing their business strategies on these shifting dynamics, retailers and consumer product makers can equip themselves to navigate the uncertain seas of consumer spending in the months ahead.
Methodology
The BCG Consumer Sentiment Survey that underpins BCG's report took place in March and April of 2011. The countries surveyed were Australia, Brazil, Canada, China, India, Japan, Mexico, Russia, the U.S., and twelve European countries -- Denmark, Finland, France, Germany, Greece, Italy, Norway, Spain, Sweden, Switzerland, Turkey, and the U.K. Survey results for Europe's Big Five markets (France, Germany, Italy, Spain, and the U.K.), weighted by population, served as a summary for Europe, and survey results for the BRIC markets (Brazil, Russia, India, and China), weighted by population, served as a summary for developing markets. In all, more than 24,000 consumers were surveyed in the main survey and more than 9,000 in the industry-specific survey.
To receive a copy of the report and its supplement, or to arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or gregoire.eric@bcg.com.
About The Boston Consulting Group
The Boston Consulting Group (BCG) is a global management consulting firm and the world's leading advisor on business strategy. We partner with clients in all sectors and regions to identify their highest-value opportunities, address their most critical challenges, and transform their businesses. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 74 offices in 42 countries. For more information, please visit www.bcg.com.