The economy may be improving, but Americans say they are still struggling. That is the finding of new research, which reported that 52 percent of Americans are struggling to afford necessities. Surprisingly, 30 percent of respondents making six-figure salaries claimed they could only afford the basics. The findings beg the question: Have we redefined the meaning of "necessities"?
"In the general sense, basics were things like food, diapers and gas," said Wendy Liebmann, CEO of analytic company WSL Strategic Retail, which conducted the research. "It comes down to things like, 'How do I feed my family? How do I pay the rent or mortgage and take care of my kids?' Those sort of everyday things that people need to keep going in their lives."
Liebmann points out economic problems in the past decade may be leaving a lasting mark on consumers and may have affected what they perceive as a necessity.
"Fundamentally, people are saying, 'I can't be frivolous without thinking it through or saving for it,'" said Liebmann. "People aren’t taking vacations, going out to dinner, buying a computer or buying a car if it is not needed. The biggest headline is, 'I can't afford to be frivolous, and while I may be able to afford a lot of those things, I am not going to do it by just putting it on my credit card.'"
The survey, according to Liebmann, points to the fact that people at all income levels are more concerned about their long-term economic stability. Despite the fact that the economy may be improving, many are handling their finances differently than they did pre-recession.
"There is a component to this of people thinking do I have to have this or do I want to have this?" Liebmann told BusinessNewsDaily. "There are two sides to a shopping list now. I think that people, regardless of income, have already created that division about consuming products and buying things."
That notion was supported by the research as 75 percent of women put price as the driving force behind purchase decisions. Additionally, 67 percent of women were more interested in getting a better price than getting a brand-name product, which represented an increase of 12 percent from 2008 and a 22 percent increase from 2004. More than a quarter of women, 26 percent, said they were unable to afford brand names, an increase of 7 percent from 2010.
In an attempt to adapt to the situation, consumers have responded by taking very specific steps to save money. The most popular money-saving tactics included:
- Cutting coupons (68 percent)
- Buying items only when they are on sale (45 percent)
- Searching for discounts before shopping (43 percent)
- Checking phones before making a purchase to compare prices (14 percent of women)
- Asking "Is this a smart use of my money?" before buying (66 percent)
- Shopping at stores they can afford (58 percent)
- Staying out of stores where they may overspend (48 percent)
- Buying less (43 percent)
"American shoppers are moving on and coming back to shopping, but at their own pace," said Liebmann. "As a result, retail sales are precarious and likely to fluctuate up one month, down the next. That’s not going to change any time soon. Brands and retailers cannot ignore this. They will need to re-think the way they do business over the next three to five years — or longer."
The information in the WSL Strategic Retail "How America Shops MegaTrends" study was based on 1,950 responses to an Internet survey drawn from a nationally representative sample.