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Consumer Trend: Trading Down
As consumers feel the pinch of a weakening U.S. economy, they are changing their spending behaviors to save. NPD Insights checked in with experts across many of the industries we monitor to find out what is changing, where and why.
Automotive
Higher gasoline prices are motivating consumers to seek out ways to make their cars run as efficiently as possible. Therefore, auto parts stores' sales of performance chemicals such as fuel additives and oil treatments are on the rise. Value-conscious consumers are trading down from premium products by snapping up lots of store brands in many categories.
David Portalatin – Senior Industry Analyst, Automotive
Fashion
Though not a new concept in the fashion industry, 'trading over' has become even more important in today's economy. Consumers buy one product at the luxury level and complement it with a value-oriented product to help justify the splurge. For example, women may pair $300-plus handbags with lower-priced, private label apparel; parents might allow teens to buy $150 running shoes, but balance the total shopping trip's cost with mass merchant jeans for $19.99.
Marshal Cohen – Chief Industry Analyst
Foodservice
We are definitely seeing trade down in our industry. We call it 'check size containment' – consumers are finding many ways to keep their check size from increasing. Recently there has been a shift from ordering combo meals to ordering from the dollar menu. Consumers are also moving away from ordering main dish entrees to having burgers or sandwiches, and we are seeing fewer side dish, appetizer, and dessert orders. All these factors are contributing to a drop in order size.
Bonnie Riggs – Industry Analyst, Foodservice
Home Improvement
While major appliances continue to suffer in this weak economy, it's the premium segment that is being affected the most, indicating even when the need for replacement occurs, consumers are being more practical in their purchasing, often trading that premium model for a value-priced option.
Mark Delaney – Director, Home
Video Games
The U.S. video games market is realizing strong gains so far in 2008, and it would seem to be unaffected by the weakening economy. However, many consumers are now downloading inexpensive – or even free - content to offset their $50-$60 frontline retail game purchases. So the 'trading down' here may be in the form of consumers' willingness to download content to obtain a less expensive gaming experience overall.
Anita Frazier - Industry Analyst, Toys & Video Games