What Expenses Do Consumers Consider Untouchable?

By Rieva Lesonsky

The term “new normal” is old news by now. But a recent survey of consumers, conducted for STORES by BIGinsight, shows that consumers at all income levels are still tightening the purse strings.

“… Events that have transpired over the past four years have forever changed consumers… evidenced in what they deem expendable and untouchable purchases,” said Phil Rist, executive vice president at BIGinsight, in announcing the results. The study asked 6,000 shoppers which expenditures in their budgets were “untouchable” (that is, something they couldn’t live without). Here’s what they found:

Technology is essential: Internet service was the number-one untouchable item, which has been the case since 2008. Eighty-two percent said Internet service was untouchable, followed by mobile phones (67 percent), cable/satellite TV (60 percent) and discount apparel shopping (53 percent). These four categories were the only ones considered untouchable by more than half of respondents.

Consumers in a giving mood: Surprisingly, while consumers are cutting overall spending, they’re increasing charitable giving. Some 41 percent said charitable contributions were untouchable. This category has been growing steadily since 2008, when 32 percent said it was untouchable.

Eating in: Bad news for restaurants–eating out is widely considered expendable. Fine dining was considered expendable by 89 percent, fast-casual by 76 percent, casual sit-down by 69 percent and fast food by 65 percent. What’s not expendable? While it’s far from unanimous, the percentage rating organic food as essential has grown from 15 percent in 2008 to 19 percent in 2011. As consumers eat more at home, the study theorizes, quality becomes more important.

So long, luxury: Consumers are giving up the high life, BIGInsights reports. Topping the list of most expendable items were luxury handbags, maid service, high-end cosmetics, country clubs, high-end jewelry, facials, satellite radio, gourmet food and manicures—all cited as expendable by 90 percent or more of respondents. What’s more, consumers at all income levels are cutting back on these goods. Those with lower incomes (under $50,000) were only slightly more likely than wealthier respondents to describe these items as expendable.

Still room for fitness: Leisure activities including health club or gym memberships and extracurricular sports leagues have held fairly steady as untouchable. In fact, health club memberships have gained ground every year since the recession began in 2008. Back then, just 14 percent viewed them as untouchable; today 18% do. Clearly, consumers are placing a priority on their health in a high-stress economy.

Less spending on leisure: Movie tickets were viewed as expendable by 58 percent and travel or vacation by 71 percent. Both of these figures have held fairly steady since 2008, indicating that consumers who cut back in these areas when the recession first began have seen no reason to start spending again.

What do these figures mean for your business? How can you capture consumers’ dollars in a new economy?

Image by Flickr user nicolasnova (Creative Commons)

This entry was posted on Friday, March 2nd, 2012 at 6:00 am and is filed under Marketing, Small Business, small business. You can follow any responses to this entry through the RSS 2.0 feed.


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