Consumers are turning to the internet to help them cope with the economic downturn.
This story first appeared in the August 19, 2009 issue of WWD. Subscribe Today.
A new study by the Pew Internet and American Life Project said 69 percent of adults in the U.S. have logged onto the Web for information about bargains, jobs, housing and government benefits, among other things.
In addition, 52 percent of adults have suffered a major economic loss during the recession — including 35 percent whose investments have lost more than half their value.
Americans remain concerned about their personal wealth and their job stability as signs indicate the country is slowly emerging from the recession. They are heading online to find the best values for their purchases.
Among respondents seeking information on the economy and the recession, 67 percent have also used the Internet to find the lowest price available for something they need to buy. Forty percent have gone online looking for cost-saving coupons, and 27 percent have searched for tips on ways to earn more money or explore prospects for a second job.
Ten years ago, the norm was going through newspaper circulars and magazines to find coupons. “But this is all online now — consumers are more educated now, in terms of bargain hunting and comparison shopping online — it’s so much faster,” said Lee Rainie, director of the Washington-based Pew Internet and American Life Project, and co-author of the study. “Consumers can also do it out of the context of local merchants. They don’t depend on what’s for sale two miles away, because they can find alternatives on the other side of the country.”
Most Americans “are comfortable with the online environment, and businesses, including retailers, know this,” Rainie said. “Retailers are offering customers all kinds of savings and discounts during the recession. Even the smallest mom-and-pop operation can have a robust online presence.”
Retail sales have fallen as consumers cut expenditures across-the-board, an estimated 6.7 million jobs have been lost jobs and home foreclosures soared during the most severe jolt to the U.S. economy since the Great Depression.
“One of the hallmarks of this era of the Internet that distinguishes it from five years ago, is that it’s become a starting point for people that are trying to solve their problems,” Rainie said. “In this day and age, people turn to the Internet to address the needs that they have for the context in which they find themselves. Right now, there’s broad, wide-ranging information available for those who have been affected during the recession. ”
The telephone survey of 2,253 adults 18 and over, taken in March and April, concluded that 27 percent of people employed full- or part-time have had their pay cut, their hours reduced or lost benefits, and 14 percent have lost their jobs.
“There’s actually a human dimension to the Internet,” Rainie said. “When people don’t understand what’s going on, we find that people are using their social networks to assess the situation they’re in. There’s a constant circling of information — users will do the research, then they’ll check with their friends, and they’ll participate in chat room conversations and on social networks to finalize the info they’ve received.”
And according to the study, consumers have not only become savvy in how to save — but also in how to sell. Twenty-three percent have used auction sites or classified ad sites to sell personal items to raise money.
According to figures from Nielsen, eBay was the leading online retailer in the apparel and accessories category during July, with nearly 2.6 million purchases — representing 27 percent of all apparel and accessories purchases online that month. The category’s buyers spent an average of $81.83 each, and made 1.54 purchases each.
EBay consistently ranks among the top online retailers in terms of traffic, according to Nielsen. Other top retailers during July included Victoria’s Secret, Lands’ End, J.C. Penney Co. Inc., plus-sized merchant Woman Within and Old Navy. The majority of the Top 10 retailers are either midpriced or discount shopping destinations for money-conscious consumers.
“They’re doing their homework,” Rainie said. “They’re gathering as much information as possible before having to spend their dollars.”