That’s good news for top brands and great products.
Pundits talk about how stressed Americans are about the future, and that’s true. Yet one outcome that may be good news for premium brands is that the U.S. dollar itself—due to its real or perceived scarcity—is very valuable to consumers right now, and they want to spend it on things they think have real value. A recent Nielsen study showed sales of high-end Greek yogurt trending up, not down, in this recession. That’s because if a consumer thinks money is scarce, the last thing they want to do is waste it on a bad experience, even as it pertains to yogurt. And that’s equally true on higher-ticket items, which is why the very desirable iPad is going to sell very well this season.
The downside of how valuable the dollar is to consumers is that they don’t want to spend it on credit card interest payments. The AP-GfK poll on consumer debt shows that more than ever, consumers are planning their spend so that they can afford to pay either in cash or as soon as they get their bill. But we’d argue that means that there will be less impulse purchasing and more budgeted spending. If so you’d expect to see more research behavior, and indeed, Yahoo reports that online shopping is up more than 900% right now—we think that’s people doing lots of homework before they get their wallets out. In this environment, it’s good to be the leading brand, and especially to have built a great online reputation.
—Victoria Else, Director of Strategy, Gigantic