Page 74 - Accelerating out of the Great Recession

THE NEW REALITIES

This savings culture reflects the mood of the times. And in
the future, consumers worldwide—and especially in the United
States—can be expected to:

1. Be more value-conscious.
2. Extend their working lifetimes.
3. Become more conservative.

Consumers Will Be More Value-Conscious

Consumer behavior is changing rapidly, with an emphasis on
so-called trading down—that is, shopping for bargains and pur-
chasing lower-cost alternatives to the premium goods they once
favored. Value retailers—for instance, Aldi in Germany and
Wal-Mart in the United States—have been gaining market
share around the world. Wal-Mart’s U.S. like-for-like (LFL)
sales increased by about 3.6 percent in the first quarter of 2009,
compared with three of the largest U.S. luxury department store
chains, which saw LFL sales decline by 22 percent on average
in the same period.
Value-oriented products have also been enjoying a rise in popu-
larity—something indicated by the slump in sales of bottled water
as consumers have elected to drink tap water (even in restaurants).
Supermarkets’ lower-cost private-label products are taking market
share from premium brands. And within the supermarkets’ private-
label product lines, the value end is performing best of all. Andy
Bond, the CEO of Asda, the second-biggest U.K. retailer and
Wal-Mart subsidiary, sees a “whole new consumer generation,” as
reported by the Financial Times. “We are moving into an area of the
frivolous being unacceptable and the frugal being cool,” Bond said. 7
Bond’s view is in line with several consumer studies, including
The Boston Consulting Group’s annual trading-up/trading-down

■ 53 ■