A few weeks back we published this simple infographic on some spending trends among consumers. We pointed out how most spending is still local and in-store, as well as how smartphones are beginning to disrupt the shopping process.
Maybe the most important part of the entire graphic is tucked away neatly in the middle. Using data from the 2012 Census, we broke down consumer spending into three categories: Expenditures (required spending such as insurance, utilities and transportation), Necessities (required spending that consumers have quite a bit of flexibility with, such as groceries and personal care products), and Leisure (true discretionary spending, such as dining out, memberships, and entertainment).
The point of this portion of the graphic is that two-thirds of a consumer's income is essentially spent the moment it arrives. And that's AFTER taxes have already shaved off as much as half of the original income. The end result is they get to choose how to spend roughly 16-20% of their income as they see fit.
A couple years back we wrote a post about the "Golden Age of the Consumer," noting how the competition for their scarce dollars was bending companies to their will. That's still continuing, as it will for the foreseeable future. In fact, considering the stagnant growth in incomes and increasing cost of living, one could now call it the "Dark Age of the Consumer" just as easily. Either way, consumers have high expectations for each dollar that leaves their wallets.
As a result, "consumerism" is being redefined. People are cutting the cords on cable, making their homes smarter, buying store brands, growing their own veggies, and eliminating just about any kind of spending that doesn't have some sort of valuable return. And it isn't just about "What have you done for ME lately?" as many consumers are selecting brands based on social and humanitarian causes.
The modern consumer sees it this way: there are brands that give, and brands that take away.
Which one is yours?
The consumer companies that are currently growing are the ones that answer this question with every interaction. They focus on the relationship, not on the sale. Corny as that may sound, it's what people expect.
It means a great product at a reasonable price, supported by responsive customer service. It means personal communication, customer loyalty programs, member benefits such as discount programs, recognition, and more. In other words, a customer-centric operation, from the CEO to the janitors.
To the modern consumer, every one of those dollars counts. The brands that bend to that way of thinking have a chance to earn some of that precious cash.