U.S. consumers are giving more thought to their purchasing decisions and redefining what it means to be a smart shopper today, says American Express who released the results of extensive new research on consumer spending behavior, identifying a "New Era of Pause and Purchase.”
The report classifies five key trends that are currently influencing consumer spending and looks ahead to see how new technologies, changing social norms and increased brand transparency are causing a significant shift in the way consumers will shop and spend in the future.
The report finds locally-sourced goods, digital shopping and "Give-a-nomics" among top trends re-shaping the American consumer. More than half (54 percent) of Americans said they try to support their local economy. Over a third (38 percent) of Americans equate being good and ethical to quality of life, far higher than being rich (5 percent) while (41 percent) of Americans cite internet accessibility as the biggest factor affecting spending habits in years to come.
"The 'smart spender' of the past was primarily focused on cost. Today's smart spender is defined by values just as much as, if not more than, price," said Mary Hines, vice president of marketing at American Express. "Furthermore, consumers told us that the 'buy buy buy' model that has driven them for decades is now shifting towards a more conscientious and values-driven way of purchasing."
The five key trends that are shaping American consumer spending today were identified based on a combination of consumer survey data, expert interviews and qualitative research that form consumer case studies:
Urban consumers report that they are shifting their habits towards those of their rural neighbors, seeking more local, home-grown and community-focused interactions, both in-person and online. These "rurbanites" buy to be part of their local community and are shopping for more sustainable products that protect the environment.
• 31 percent of survey respondents say they want to be part of their local community so they purchase from more local brands and vendors
• 55 percentof consumers are concerned about the quality of products over quantity
• More than half (54 percent) of Americans said they try to support their local economy
Implications: In the coming years, more consumers will continue to patronize smaller, community shops, local vendors and brands. Additionally, more ethical products will be prioritized as consumers make choices that promote a more self-sufficient, sustainable lifestyle.
Consumers are choosing purchases that allow them to give back to charity, preserve the environment or help their communities. They are increasingly expecting brands to be socially responsible, and are looking for ways to make their everyday purchases count.
• 83 percent of Americans wish more products, services and retailers would support worthy causes
• 36 percent say they expect brands to be ethical
• 30 percent expect brands to be environmentally friendly
Implications: As consumers become more involved with charities through their purchasing behavior, they will continue to expect brands to be engaged in philanthropy and they will seek out brands whose actions are in sync with their personal beliefs. They may soon expect reminders of who or what their purchase benefits, like receipts, to make their efforts tangible.
3. COBs (Co-Created Own Brands)
Consumers are looking for greater creative input and personalization by co-creating with brands. In exchange, they expect rewards and benefits for their contribution of designing new product ideas and helping to market those products.
• 26 percent of Americans surveyed said they expect brands to be creative, rising to 37 percent among 18-24-year-olds
• 16 percent expect their retail environments to be collaborative, rising to 20 percent among 18-24-year-olds
• 23 percent of respondents look for well-being and luxury products they can customize
Implications: Modern "micropreneur" consumers will expect to play a bigger part in creating products and goods, radically changing the traditional retail model. Consumers will become part of the product design process, and may even share the profits that they generate.
The rise of online shopping and social networking has allowed consumers to shop as groups and consume as communities, or 'comm'sume. In turn, this has allowed brands to curate goods and services specifically for local consumers and reach those shoppers through their online social channels. Shoppers are willing to leverage their peers online to help drive deals and bargains.
• 41 percent of US consumers say they buy more products online than they did a year ago
• 41 percent of Americans cite internet accessibility as the biggest factor affecting spending habits in years to come
• 31 percent of US consumers say they use online vouchers or shopping portals, like those from Groupon or Gilt Groupe
Implications: Online coupon culture will move from desktop to mobile, reimagining discount culture with real-time, location-based deals.
5. CiCo (Check In To Check Out)
The use of mobile devices and the internet has allowed brands to personalize location-based offers and perks to entice shoppers to "check in" to share deals with fellow shoppers and incentivize group buying on the go before they "check out."
• 25 percent of consumers say the use of GPS affects their shopping
• 23 percent say the availability of smartphones impacts their spending
Implications: CiCo is only the beginning of how consumer loyalty can evolve in the coming decade. The mobile web will become a key shopping portal, working as an intimate, personal digital concierge to revolutionize the shopping experience.
"You can imagine a time when every purchase and product is, in some way, tailored to a consumer's individual needs," said Hines. "Whether it's a coupon offered only to your immediate social circle, or the ability to allocate a percentage of every purchase to the charity of your choice, we will have more individuality than ever before as consumers. American Express will continue to explore the newest innovations that will help our customers become the smartest shoppers they can possibly be."