Smart shoppers focus on needs, not wants

Mike duke.jpgAfter destocking, and then restocking, what next?

The blog is a great believer in following the insights of the major retailers, who have been consistently “on the money” in their analysis. Thus it takes very seriously the comments of Wal-Mart CEO, Mike Duke, who has joined the camp of those who believe we face a “new normal” – not a return to the levels of demand seen in the 2003-7 boom period.

Interviewed by the Financial Times, Duke was quite clear about the challenges ahead. “The ‘smart’ shopping, the customer that really looks at price and value and quality, the deferral of purchases … this is something that will be with us for a long, long time.”

Whilst chain-store JC Penney, which targets middle- America, told investors that “consumers are acting rationally, they are paying down their debt, they are spending for things they need. And for the more discretionary thing, they are being more cautious.” US Federal Reserve data confirms this trend, with consumers repaying $21bn of debt in July, the largest amount ever seen since records began in 1943.

Equally, the head of ING, the largest US thrift bank told US investment magazine Barrons that “a lot of the data is showing there’s a fundamental shift in spending habits“. CEO Arkadi Kuhlmann said demand for the critical Christmas sales will be relatively slow as 80% of people now believe that “having money in the bank” makes them happier than “buying something“.

US private consumption is worth $10trn and accounts for 16% of total world GDP. So this change of spending habits carries enormous implications for chemical industry demand. The blog’s annual Budget Outlook, due next month, will tackle the issue in more detail.

It might be interesting to see whether blog readers agree with the ING opinion poll results.  You can vote below, if you wish.

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