By  on April 7, 2010

The American public isn’t ready to resume spending with vigor, but segments of it are poised to start looking more often for clothes beyond the confines of their own closets — reversing a more than two-year trend.

Despite a 9.7 percent unemployment rate, the job picture for young adults is showing signs of improving, prompting recession fatigued Millennials (ages 18 to 32) and Generation-Xers (ages 33 to 45) to seek a “survival reward,” such as replacing a worn pair of pants or piece of furniture, said Irma Zandl, president of The Zandl Group, a marketing consultancy.

“People are starting to say they’re getting good jobs — it’s a marked improvement from the last two years, when every time we talked to consumers they were struggling to find jobs or felt precarious in their existing jobs,” she said.

Acknowledging that the job climate and economic environment are “not wonderful, not back to the way it was,” Zandl said there is still an “uplifting effect” taking hold on the psyche of some consumers, possibly stirred by the creation of 162,000 jobs last month — the most in three years.

According to a Zogby Interactive Survey of 4,218 adults conducted in mid-March for WWD, 13 percent of the public plans to spend more overall this year than in 2009. Prominent among them are the Millennial generation, people with annual household income of at least $75,000 and men. Almost one-third of a survey of 100 Millennials and Gen-Xers considered to be leading-edge consumers by The Zandl Group, told the marketing consulting firm in late March that they intend to spend more this year.

Asked if they were making apparel purchasing, in particular, a bigger priority, the Millennials were the clear leaders, notably those ages 18 to 24. About 16 percent of these young adults polled by Zogby International said clothing was gaining importance on their shopping lists, compared with just 6 percent of American adults in general.

“Twenty years ago, young adults wondered about the path to becoming chief executive officer,” said John Zogby, president and ceo of Zogby International. “Today, they say ‘Do you have anything?’ Yet it’s still important to the Millennials to have certain things. The Millennials feel like they have to keep up with their peers, look attractive, look good for work. There have always been pressures on people in this life stage to keep up with the trends.”

Also voicing greater-than-average interest in acquiring new apparel were people with annual household income of $25,000 to $35,000 (15.3 percent), residents of the eastern U.S. (9.2 percent), African-Americans (7.8 percent) and college graduates (7.4 percent).

Nevertheless, the Zogby consumer survey revealed buying apparel is a lower priority this year than last for 40 percent of American adults. Almost half, 47 percent, plan to spend less overall in 2010, including half of the country’s women. In the U.S., women influence or make almost three-quarters of purchases, compared with the four in 10 who do so in developed countries, said Michael Silverstein, a senior partner and managing director at The Boston Consulting Group.

With the persistence of consumers’ intentions to spend less for the past two-and-a-half-years, it appears that trading down for many things, including apparel, is becoming a way of life.

“There’s been a paradigm shift in how people buy,” said Robert Passikoff, president of the Brand Keys research firm. “They want value for the dollar. They’ll be spending less, but it doesn’t mean they’ll be buying fewer items.”

In asking women about their intentions about how to spend money in the three months from March through May, Big Research has found “some movement in a positive direction, but still with a lot of caution,” said Phil Rist, executive vice president of strategy. “We are moving sideways. Practicality is still a big consideration.” During this three-month period, smaller-ticket items, including clothes, are likely to lead any spending rebound, he noted.

The scale of any such ascent is likely to be constrained by the changing role fashion has been playing in people’s lives over the past few years, marketing experts said. “Fashion has gradually been becoming less a priority for many people,” Zandl said. “It is broad-based and it is more pronounced among people who are 30 and older.”

Reasons for the drop-off vary, from shifting values to simply getting “more satisfaction” from other things, like iPods and e-readers such as the Kindle and the nook, Zandl said.

The biggest impetuses for buying apparel were the usual ones: for three-quarters of the adults polled by Zogby International it was replacing worn out or torn clothes. For 16 percent, it was needing a new size, and 13 percent were moved most by new styles.

Asked what kind of marketing campaigns have wielded the most influence on their apparel purchases, almost six in 10 said it was the offer of sales discounts or promotions, far surpassing three other potential influences. Word-of-mouth was a distant second, with 3.2 percent citing it. Only 2.3 percent said advertising was the most powerful.

“Day-to-day life will be about trading down, buying private labels,” and then trading up and “taking a vacation later,” Zogby said. “The implications for upscale shopping are enormous. There are not enough people spending more to give retail business a [big] boost. It is daunting. It’s hard to see such a big economy quickly turning around. I think this governs the next decade.”

Underlying conservative spending could be the public’s desire to be “slightly less materialistic and to be more discriminating in buying things that are really important to them,” as they increasingly value thrift, family and community, socioeconomic trends cited by John Gerzema, chief insights officer at Young & Rubicam and author of “Spend Shift: How the Post-Crisis Values Revolution Is Changing the Way We Buy, Sell and Live,” due from Random House in October.

Zandl, for one, sees potential for a near-term upswing because of the current climate’s volatility, despite projections of low-single-digit growth this year for the U.S. economy, in which consumers account for roughly two-thirds of the Gross Domestic Product.

“I get a sense people are itching to indulge a bit,” she said. “The things that can affect the consumer’s psyche are intangible, and that can change very quickly.”

But for Zogby, the public’s guarded spending plans could be signaling a transformative moment.

“The key question is, ‘Will it come back to the way it used to be?’” Zogby said. “The Great Depression defined an entire generation’s [sense of] knowing the value of a dollar.” After a long period of prosperity, he added, the mind-set of people about buying certain things has now become: “If we shop, we are going to trade down.”

To Read the Full Article

Tap into our Global Network

Of Industry Leaders and Designers

load comments
blog comments powered by Disqus