Leadership

Understanding the New American Consumer

By Sean Silverthorne

Updated on: January 12, 2010 / 11:47 AM EST / MoneyWatch

The economic crisis has fundamentally changed how Americans spend their money. Whether this shift is short term or permanent remains to be seen, but we know these things for sure today.

U.S. consumers are spending less, although more than last year.
They are saving more.
When they do spend, they are very careful about what they buy (value over sizzle) and who they buy it from (trusted brands).

Nancy Koehn, a Harvard Business School historian with a focus on retail, calls this "the new normal," the biggest change in consumer attitudes since WW II. Writing on her HBS.org blog, Koehn observes:

"When the war was over, consumers were cautious and thoughtful as they prepared for an uncertain future. We are seeing similar behavior today."

Here are the three things that distinguish the American consumer of today from even just two years ago, Koehn says. Consumers are:

Turning to valued brands. Wal-Mart, Apple, McDonald's and many other old and new brands are benefiting as consumers place their trust in companies that consistently deliver high-quality product and value, and who stand behind what they sell. We're not in the mood to take chances or sacrifice quality to get a lower price.
Vetting potential purchases over the Internet. Consumers are going online to do their homework on products, including seeking the opinions of other users. Retailers are responding to this shift by deploying Twitter and other social networking channels to keep consumers informed.
Looking for the story behind the product. Household are researching not just prices and attributes of products, but the story behind the products, Koehn says. "Where did the offering come from, what kind of company created it, how their are employees treated? It is simply not enough to be the best racehorse on the track anymore."

Read her entire post, American Consumption and the New Normal, then come back here for a discussion. Do your own buying habits echo what Nancy Koehn is seeing? And if you are in the business of serving consumers, how can you use this knowledge to create a sharpened value proposition for the New American Consumer?

(Shopper crossing image by turtlemom4bacon, CC 2.0)