RECESSION-REWIRED: Leaner times hit home for moms and younger millennials

NITA ROLLINS AND DALE EDMAN

PRESENTED BY: SPONSORED BY:

• Monthly webinar series

• iCitizen mission: Take a deep dive into the opportunities and challenges offered by the new breed of consumer—the icitizen

• Topics ranging from social media to consumer personas and beyond

• iCitizen Symposium: May 4 - 6, 2010 in Columbus, Ohio

• For more information, visit: www.resource.com/icitizen

speakers

Nita RollinsFuturist, RI:Lab

Dale EdmanDirector of Account Strategy

agenda

• Recession Obsession

• Understanding the Recession Rewiring

• Deconstructing the (Co-) Shopping Journey

• Innovating Your Way Out

RECESSIONOBSESSION

DEPRESSION

DEPRESSION

THE LOST DECADE?Median household income in 2008 slipped

to $50,303 from $51,295 in 1998.

THE LOST DECADE?Median household income in 2008 slipped

to $50,303 from $51,295 in 1998.

Source: U.S. Census Bureau, 2009

Real Personal Consumption per Capita vs. Savings

YE

AR

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YE

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GE

/ P

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Source: EconomPic Data, June 2009

Shifting gears...

CONSUMPTION

SAVINGS

“90% of the U.S. respondents said that their households had reduced spending as a result of the recession. 45% of those who reduced spending did so by

necessity, 55% by choice.” —McKinsey Quarterly, March 2009

CONSPICUOUS CONSUMPTION

CONSPICUOUS CURTAILING

“After completing a shopping trip…23% of those surveyed admitted to feeling relieved…But 5.3% felt guilty and 20% said they were downright depressed.”

—WWD, April 2009

Abercrombie & Fitch

Percent Change Same Store Sales August 2009 vs. August 2008

Aeropostale

American Eagle

Buckle

CostcoGap, Inc.

Hot TopicJCPenney

Kohl's

Limited Brands

Macy’s

Neiman Marcus

Nordstrom

Target

TJX Companies

Source: Retail Forward, August 2009

Sales at Goodwill stores open at least a year rose 7.1% in the first three months of 2009 over the same period a year earlier. Source: NYT, June 10, 2009

Q.How has the consumer changed?

Will the changes be enduring?

Is there untapped opportunity in this crisis for online retailers?

Remember the 1990s?

During the early ‘90s

recession, teens were

discovered as a valuable

demo and peer pressure

emerged as a powerful

market force.

“Their parents might have gone bargain basement but kids, it turned out, were still willing to pay up to fit in.”

Source: No Logo, Naomi Klein

GEN Y: The prematurely affluent generation

1st wave feel recession is unfair

My generation is being dealt an unfair blow because of this recession

The current situation with housing prices actually makes me feel optimistic about

buying a home

All of the online resources for jobs searches and networking make me feel less anxious

about losing/finding a job

If the employment situation worsens, I may have to move back in with my parents

Most of the people my age that I know are not that worried about the recession

My friends are doing interesting entrepreneurial things to make more money

If I lose/have trouble finding a job, I’ll just start my own business

% who agree

Among young adults 18-29

Besides fear, how do most Millennials feel about the recession? A narcissistic sense of being unfairly burdened. Yet some optimism emerges as well.

NO FAIR!

Source: JWT, 2009

Thrift is an alien virtue

73% of women said the recession has fundamentally changed the way they think about saving and spending money vs. 57% of men.

Source: Performics Survey, April 2009

OU

R M

ET

HO

DO

LOG

YSECONDARY SYNTHESIS

150+ articles, Forrester, Nielsen, McKinsey, ExactTarget, JWT, Gen BuY

+PRIMARY RESEARCH• 20 in-person interviews• 50 online participants in a 10-day forum

discussion with Harris Interactive• Tested 3 RI visual prototypes• Conducted survey with BIGResearch• Partnered with ExpoTV• Tapped RI Trendwatching practice

DIGITAL TEEN•Age 13-18, mix of race, income-earning/non-income-earning

•Shops online, regular internet and email user, use of social networking and SMS and owns cell phone.

DIGITAL MOM•Age 30-55, mix of married/single, income, and race

•Shops and purchases online; frequent email user; some use of blogs, social networks, and/or Twitter, online reviews and texting.

UNDERSTAND THE REWIRING

RECESSION

BRANDSHOPPING

DIGITAL

RECESSION

BRANDSHOPPING

DIGITAL

Forced to grow up fasterTypical teen egocentric worries displaced.

Reconciled yet feeling fortunateChance to reset family values, become more resourceful, prepare for the future.

DIG

ITA

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DIG

ITA

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OM

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“It’s the fault of the previous generations who over-

consumed. So I hope we can learn from their mistakes and be the generation that lives within their means.”

81% of household heads say

that kids are aware of the recession and the impact it is having on household budgets.

Source: Ad Age, April 2009

—Alicia, 18

Recession-related issues have replaced more typical teenage ego-centric worries as their top concerns. (Among teenagers 13-19)

2nd wave facing recession head-on

If there will be good jobs when I graduate

Whether I’ll have to give up some of the things I like because of the recession

How my parents are doing money-wise

The condition of planet Earth that will be left to my generation

How attractive I am to others

How I’m doing in school

Which college I/my family can afford

Source: JWT, 2009

Which college will accept me

How many friends I have

How popular I am at school

How I’m doing in extracurricular activities

Keeping up with what other kids my age have Base = 100

293

251

249

221

201

180

151

143

92

78

75

73

75% are getting more or the same allowance as last year

parentsgrandparents, aunts & uncles

jobs (babysitting, dog walking, etc.)

eBay, Craigslist

allowance

Source: Seventeen survey, 2009

“I’ve now seen how quickly a recession can come on and how long it can take to get

out of one. I’d like to set a good example for my children and teach them to be smarter with their money.”

“It has been a tremendous lesson in how to live within

your means and separate

wants from needs.”

—Pamela, 47

—Alanna, 34

RECESSION

BRANDSHOPPING

DIGITAL

Savvier about financing their purchasesHave discovered online research, coupons, clearance racks, selling and swapping.

Smarter, prouder about living with lessDistinguishing between needs vs. wants, relying on codes and coupons, shopping clearance first.

DIG

ITA

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DIG

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“I feel good because I can

actually save my money before I make a purchase. I feel that I’m handling my business as a young man should.”

69% of young people now

research all purchases before they buy anything.

Source: OTX, May 2009

—John, 16

—Luke, 13

Over the next five years,

moms of teens plan to:

57% consider purchases carefully57% be more price conscious55% stick to a budget57% dine out less

Source: BIGResearch, July 2009

“My shopping habits will not change back once the recession is over. We are not lacking for the basics and still have a wonderful life. Less is more in our family now.”

Coupon sites have been the second-most-visited category on the Internet—behind job sites—for about a year.

Source: eMarketer, May 2009

—Blanca, 43

RECESSION

BRANDSHOPPING

DIGITAL

Holding outDeferring purchases and selectively trading down or changing channels

Trading WAY downMore than ever, putting the family’s needs before their own; rethinking luxury

DIG

ITA

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IGIT

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Brand loyalty is increasingly important among 13-21 year

olds, as 73% now shop at a fixed group of stores.

“I’m pretty picky about clothes. They’re the hardest to give up. I notice the difference in quality so I usually compromise by

buying good brands on sale.”

Source: Euro RSCG Discovery survey, May, 2009

“I haven’t really given up any brands. I maybe don’t buy quite as much, but I still buy the same brands I always did.”

—Alicia, 18

—David, 17

Favorite Brands During the Recession, Resource Interactive and Harris Interactive, 2009

SHOPPING

DIGITAL MOMS Favorite Brands During the Recession, Resource Interactive and Harris Interactive, 2009

“I’m not really into any specific brands anymore. I realized that I don’t need a $300 purse as much as my kids need clothes and food.”

“Definitely more Target shopping going now ....previously it was Nordstrom, Coach, Dior.”

43% are buying store brands instead of national or high-end brands.

Source: TNS Retail Forward, August 2008

—Keri-Anne, 32

—Sheryl, 49

RECESSION

BRANDSHOPPING

DIGITAL

Seeking independence from adults through digital devicesAs the first true digital “natives,” teens have more ways to experience freedom.

Seeking control and connectionA means of getting answers and more value, monitoring kids, finding social fulfillment.

DIG

ITA

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DIG

ITA

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“There’s a mini-generation gap between under-twenty and over-twenty Gen Y’rs, due to the swift progression of technology in the past two decades.”—Gen BuY, October 8, 2009

% N

ET

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GE

IN

US

AG

E

Net Change in Communication Usage by 15-17 year olds in last 6 months

Source: Exact Target, July 2009

Text SocialNetwork

Email

Instant Message

% more often - % less often

• Texting, social networking grow at IM's expense

• Email usage rising slightly, significantly more among smartphone owners (25% of teens)

44

25

4

(7)

Reliance on texting and SNing

“Today’s teens are so focused on communication that iPhones are the new jean.”

Most of 8-14 year olds report having online chores including sharing pictures with relatives (38%) and getting driving directions (35%).

Source: GenBuY, October 8, 2009

DIGITAL = Teenage Freedom

Source: AdAge.com, April 2009

“I will almost always check online….even if I’m going to buy it in the store.”

—Louise, 49

“I’m a serial Googler.”

“SECRET” SHOPPERS

40% of total online spending came from $100K HH consumers, who increased shopping by 17% in Q4, 2008.

Source: comScore, 2009—Tracee, 51

Moms with teens said the internet...

46% Helped me save money through access to easier price comparisons, coupons, and deal alerts.

41% Helped me become a smarter shopper; product reviews and ratings, blogs, and product information has helped me make more informed purchases.

21% Helped me make money through selling things I no longer need on sites like Craigslist, eBay, etc.

SHOPPING

DIGITAL MOMS Source: BIGresearch and Resource Interactive, August 2009

UNDERSTAND THE REWIRING

Listen with a new ear—let go of truisms!

Seek to understand the clashing value systems

Identify new segments to serve or new ways to deliver value

UNDERSTAND THE REWIRING

DECONSTRUCT THE (CO-) SHOPPING JOURNEY

EVALUATE RATIONALE

NEGOTIATECOORDINATE

PURCHASEOBSERVE & RE-ARM

I WANT I NEED I WANT

DESIRE BUILD THE CASEPRESENT THE CASE

NEGOTIATE ACQUIRESHARE & SWAP

DIFFUSESELF-

EDUCATE

TEENS:

MOMS:

Check Lucky at

Your Service

app

Earmark magazine

ad

Stream fave TV show on

Hulu

Check out comparison

shopping sites

Search past

emails for

promo codes

Google “coupon” + brand name

Post Q. on

favorite mom blog

Google item

Poll friends on Facebook

wallCheck MobileSMS

Visit the web

site

Text friends about

meeting at mall

Downloadfilm trailer to iPhone Visit

brand/store site and build

wish list

Check teen’s

shopping cart

Check her PayPal Student Account

Check store for clearance

Review items

held in cart

Assign more

chores in exchange

for $

Send phone pix

to Mom from store

Discuss upcoming gift cards

Post outfit on Polyvore

Upload pix to

Facebook fan page

Ratings&

reviews

List new item on

Craigslist

Wear to game &

take snaps

Say yes on Bill

My Parents

DECONSTRUCT THE (CO-) SHOPPING JOURNEY

Create new hooks that support needs-based shopping and teens' fact-finding zeal

Allow moms and teens to shop together without being together

Look for ways to help moms help teens become financially responsible

UNDERSTAND THE REWIRING

DECONSTRUCT THE (CO-) SHOPPING JOURNEY

INNOVATE YOUR WAY OUT

TEENS (still) want a

continuous stream of new

items in their lives because

they are overstimulated and

they care what their friends

think and have. However, they often have to justify their

desires to parents.

MOMS want to teach their

kids smart shopping

because they have

learned valuable lessons

from the recession.

However, they feel guilty

bringing more stuff into the

household.

Generally receptive overall —“neat,” “cool” and “useful”

Reuse concept is unique and appealing with strong interest in swapping with others

Option of setting communication preferences or having offers consolidated didn’t seem unique (not fully understood)

Generally receptive overall – “cool,” “helpful” and “user-friendly”

Reduce/reuse appealing; perceived as reducing waste

Appreciates how the personalized experience makes finding her promotions easier and ensures she’ll not miss out on a good deal.

TEENS MOMS

MOMS do not enjoy

shopping with their teens

because they are

unfocused and inefficient.

However, moms need to

see what teens have in mind

to provide guidance, consent

and payment assistance.

TEENS do not enjoy

shopping with their moms

because they crave

independence and time with

friends. However, connectivity with mom is

essential to getting timely

consent and access to funds.

Receptive overall – “cool,” “fun” and “something new”

Downloading a brand-specific app for this purpose was too time-consuming, complicated

Like that they can get pre-approval from Mom and solicit input from friends

Mixed overall – “cool” and “innovative,” but “too many steps’’

Good way to participate in bigger purchases

“Get the OK to buy” and "Bill My Parents" was perceived to be irritating, potentially unsecure or encouraging more shopping

TEENS MOMS

MOMS want to feel smart

about how they maximize

their shopping because they

have budget limitations.

However, this isn’t much

fun because there’s no room

for impulse.

TEENS are impressively

savvy with their OWN money

because they “feel” the

transaction more fully.

However, they need help

shopping within a budget.

Very receptive overall – “cool,” “creative” and “handy”

Most indicated this saves time and makes it easier (and more fun) to shop within their budget

Some suggested it makes them smarter about money

Very receptive overall – “more efficient,” and “helps me get the most for my money”

Some questions/concerns about shipping, “hold it” details and in-store pick-up

See the promise for their teens, as it would teach spending within their means; and ideal for holiday shopping

TEENS MOMS

INNOVATE YOUR WAY OUT

Begin with an Insight Formula Create rapid prototypes Test, (fail quickly), learn,

launch—agility is key!

Support consumers as marketers and merchandisers!

???

Autofill codes, points, and special offers; deal expiration alerts

Support social marketing and merchandising

Monetize your Facebook page

Add Raves to your Ratings & ReviewsGet more relevant at the shelf levelGet more relevant at the shelf level

Use messaging to tap into thrift mentality

Make meaningful service changes based on feedback

Use social networks to share shipping codes or offers

Introduce new products and price points

Shift the dialogOffer new utility/fun

A crisis is a terrible thing to waste.

—Paul Romer, Stanford economist

thank you.www.resource.com

by Kit Yarrow and Jayne O'Donnell

Special thanks to our research partners:

Nita Rollinsnrollins@resource.com

Dale Edmandedman@resource.com