American consumer shopping behavior during economic recession

Shopping Behavior

The shopping experience for the typical American has changed dramatically over the last few years. Due to economic circumstances plaguing both the global and domestic economy, shoppers are now more apprehensive about their purchasing behavior. Likewise, other economic circumstances such as the decreasing trend of the average Americans income are also contributing to the extreme bout of pessimism the nation is currently experiencing. It is no secret that the economy is in shambles with unemployment around 8%. Many states such as Florida and Nevada are experiencing unemployment rates still near the 10% range. As such, shoppers are attempting to save more money and are foregoing luxury purchases until they feel more secure in their finances. From my interview, I also realized the prevalence of government intervention on the overall sentiments of the average American shopper. As I will allude to in the following pages, American shoppers are fearful for their future. Many feel as though they have not adequately saved for retirement or saved adequately in the event of long-term unemployment. As such, their shopping behaviors indicate the extreme bouts of pessimism within the overall economy today.

General Shopper Sentiments

To begin, I believe it prudent to discuss the general sentiments of the average shopper within the context of the economy as a whole. The shopper I observed and interviewed was located in a Wal-Mart shopping center. Upon my interview with the customer, it was revealed to me that shoppers are now trading down as a result of economic uncertainty. Many consumers are afraid for their financial futures, and their shopping behavior reflects such pessimism. Here, as it is customary of many Wal-Mart customers, individuals are looking for the best bargain. They often care more about the price of a particular product than of the actual quality of the product itself. This was evident with both my interview and observations of the individual. In particular, commodity-based products such as shirts, socks, and other forms of undergarments are purchased primarily on the basis of cost. These products, as the shopper indicated to me, only provide a marginal benefit to the customer. For this particular shopper, there was no aesthetic appeal or brand loyalty in regards to commodities. The only factor to her was the price of the item she purchased. Believing Wal-Mart to have the most competitive prices, she instantly gravitated to the lowest priced item relative to the quantity provided.

The shopper also revealed another truth about the shopping behaviors of the average American, which is the implication of inflation on future purchasing power. The shopper I interviewed was particular concerned with government spending and how that spending would affect the purchasing power of her hard earned wages. The shopper indicated to me that she is a sales associate at Macy's Inc. where her pay is structured based on commission. As such, her wages can vary dramatically based on the underlying business conditions present within the retail industry. What's important to note is that irrespective of what she earns, the value of each dollar of wages will inevitably fall over time. As such, she purchased more than what she needed in an effort to avert the influence of inflation of her purchasing power. She anticipated higher prices in the future, and as a result purchased more products now. This indicates the government's role in the overall shopping behaviors of society. While the government is well intentioned with its dramatic spending increases, this action is only increasing the short-term pessimism present within the market as a whole.

Managerial and Public Implications

Such shopping behavior has extreme implications for managers of retail chains or consumer-based products. The first implication, as evident from my interview, is to produce a product that will be in demand irrespective of economic conditions. These products such as beverages, toothpaste, detergent and the like, will always have a market and therefore will always be able to produce profits. These profits can they be used to maintain or enhance the companies workforce, thus helping avert more economic turmoil for the public at large. Further, it's important to recognize economic bubbles and take the necessary steps to stop their impact on society. As I alluded to earlier, the main reason shoppers engage in the behavior they do is primarily because of the economy. When the economy is good, individuals purchase more products which helps further sustain the economy. However, as the economy begins to unravel so to do individual shopping behavior. This has a profound impact on the public because 70% of the nations Gross Domestic Product come from consumer spending. If consumers don't spend, then the economy and the public overall suffer. As such, I believe the government should do a better job a helping abate the influences on a recession on the shopping and spending habits on the average individual. If done correctly, the lows of the economic cycle will not be as low as before, while the highs of the economic cycle will not be as high as before, thus helping protect the consumer from economic turmoil.