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Why this Summer Isnt Sizzling

By Tom Branna, Editorial Director | July 6, 2010

Ready for a double-dip? More consumers in the U.S. are curtailing their vacation plans in an effort to save money. Their cost-saving measures play a role in the household and personal care industry, too.

Not so fast. A year ago, U.S. consumers were fairly optimistic when asked about the prospects for the U.S. economy. But a year later, with growth slowing, housing problems continuing and Wall Street indexes falling, consumers are not so sure about this recovery and not even the lure of a much-needed vacation can get them to loosen their purse strings.


SymphonyIRI’s recently-completed 2010 Summer Rituals Survey found that American consumers entered the current vacation season with a conservative spending mindset compared to a more optimistic outlook expressed by consumers in the summer of 2009. According to SymphonyIRI, this year, they are more apprehensive and are selectively keeping their wallets closed to “extras” and cautiously open for essentials.


For example, 57% of consumers in the lower-income brackets plan to spend significantly less or not spend any money on vacations in 2010—a 15-point increase over 2009. Meanwhile, in households earning $35,000-$54,999, 46% plan to reduce or completely eliminate their vacation budget in 2010, while 38% of households earning $55,000-$99,999 have the same plans.


Even the well-to-do aren’t feeling so hot about their prospects this summer. Among households earning $100,000 or more, 34% will reduce vacation spending this year. Furthermore, 12% of consumers within this income group plan not to spend for vacation at all in 2010. No one from this income group surveyed in 2009 said they would spend nothing at all on vacation.


“We found that last summer, consumer were opening their wallets more because they thought it was going to be a speedier economic recovery,” explained Susan Viamari, editor of SymphonyIRI’s Times & Trends. “This summer they think the recovery is taking longer and they’re not sure when it will get better.”

It may be difficult to connect-the-dots, but consumers who pull back on vacation spending are also finding ways to curtail their household and personal care product spending too. For example, in the beauty care category, they’re trying to make personal care products last longer by adding water to that seemingly empty shampoo bottle or trying to make household cleaning products last longer (see charts).


“There is a darkening in the consumer mindset,” observed Viamari.
“Consumers are saying ‘we became a little too free-spending (before the recession).’”


Now they’re trying to reverse that. But this new frugality doesn’t have to translate into gloom and doom for marketers of household and personal care products.


For example, marketers of at-home hair color kits stand to benefit from a decline in visits to hair salons.


“The CPG industry has a nice opportunity here,” insisted Viamari. “(Consumers) are eating at home more and when it comes to health and beauty aids and household cleaners, consumers are doing more for themselves such as coloring their hair and cleaning their own homes.”


Companies that can successfully tap into this conservative consumer mindset may have the best chance of thriving during this rocky recovery.
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