Consumerology: High personal debt and a comfort with frugality keeps culture of thrift alive, even as economy rebounds
TORONTO, March 30 /CNW/ - Despite a surge in confidence in the economic growth of the country, consumer spending will not reflect that newfound confidence in 2010, according to Bensimon Byrne's latest Consumerology Report, released today.
"This edition of Consumerology found that despite increased optimism about the economy, large personal debt will severely limit Canadians' ability to return to pre-recession spending levels," said Jack Bensimon, President of Bensimon Byrne. "In addition, our survey shows that the culture of thrift and frugality that developed during the recession persists among Canadians of all income levels."
Each quarter, the Consumerology Report, commissioned by the Toronto-based advertising agency and conducted by Gandalf Group, tracks consumer opinions about the economy, their personal financial expectations, consumer buying intention, and attitudes toward key national issues. Now in its third year, the study provides, to date, one of the most comprehensive profiles of the recession.
While the study showed that most Canadians think the recession is over and the economy is growing, it also unearthed an underlying revelation that the effects of the recession will have a lasting impact on cultural values, not just economic activity.
"We're seeing a continued trend toward essential spending versus discretionary spending and a desire for Canadians to opt for no-name over brand names and bargain-hunting over impulse purchasing," said Bensimon. "On a lifestyle front, the burden of debt is resulting in delayed retirement plans, changing education savings plans for children, and siphoning extra spending money to pay down debt rather than investing, saving or purchasing in 2010."
Canadian Consumers in 2010
The study revealed an astonishing level of consensus among Canadians that the recession is over and the economy is growing. More than half of Canadians say they are better off than they were a year ago and over 80 per cent think the economy and their own situation will be even better a year from now.
Although optimism is growing, many Canadians remain burdened with personal debt and have been impacted in ways that will have long-term implications. Over half of Canadians believe that they will have to delay retirement due to their financial situation and 40 per cent of parents are re-adjusting their education plans for their children. The study found that more than one third of Canadians are so loaded down by non-mortgage debt that it will take three years or more to pay it down and over 60 per cent of Canadians would put extra spending money into paying down debt rather than investing, saving or making a major purchase.
Despite high levels of optimism about the economy, the culture remains one of thrift and frugality, not spending and extravagance. Compared to a year ago, 65 per cent of Canadians report that they are doing more saving and less spending due mostly to large personal debt. Very few Canadians believe it is a good time for them to make a major purchase and 75 per cent report that they will lower their overall monthly discretionary spending this year. A remarkable 92 per cent of Canadians are considering "need" over "want" when it comes to spending, and most Canadians report that their spending remains much lower than it was a few years ago.
Recession Spending Behaviour in a Growth Economy
For the past year, Consumerology has tracked the rise in consumer attraction to generic products and discount retailers. People of all demographic groups, no matter how economically secure, say they are eating at home more and eating out less, buying more no-name products and fewer brand name products (with the exception of those earning more than $150K), and looking at flyers and coupons. Over 60 per cent of Canadians are buying fewer environmentally friendly products because of perceived cost, and 90 per cent of Canadians report doing more bargain-hunting and less impulse shopping than a year ago. The only exception to the trend is that more Canadians are choosing to drive over using public transit.
Anxiety About Declining Opportunities
Underlying the short-term economic optimism is a more fundamental anxiety about future prospects. Sixty per cent of Canadians are behind where they thought they would be financially at this point in their life, and Canadians are much more likely to think our standard of living will be lower rather than higher post recession. Most Canadians have hope but few have confidence that they will ever be more prosperous than they are now, and fewer than one in five Canadians is relatively confident that the next generation of Canadians will have a better quality of life than the current generation enjoys.
Additional Survey Highlights
- Canadians have high expectations that both national and personal
balance sheets will be improving over the next year.
- Spending restraint remains "in" and conspicuous consumption remains
"out" - except among the highest income brackets.
- Out of 27 possible spending areas tested, Canadians expect to
increase rather than cut back their spending in only six of those
areas (mostly essentials), due to the fact that they expect prices to
- Paying down debt is the top priority for discretionary spending.
- One in four Canadians (who have more non-mortgage debt than savings)
reports having to downsize their home.
- Over 80 per cent of Canadians are opting to buy generic products over
brand name products.
About the Survey
The Consumerology Report is a quarterly survey commissioned by Toronto-based advertising agency Bensimon Byrne. The Gandalf Group conducted qualitative and quantitative research to produce the Consumerology Report. A national proportionate quantitative online survey was conducted in English and French with 1,500 Canadians between February 23rd and March 1st, 2010. Previous editions of the Consumerology Report have covered a variety of topics including: The Impact of Environmental Issues; New Canadians, New Consumers; and Evolving Attitudes Towards Health and Nutrition.
The full Consumerology Report on Economic Trends and Consumer Behaviour, as well as all previous reports, are available for free download at www.consumerology.ca
About Bensimon Byrne
Bensimon Byrne is a privately owned, full-service, Canadian advertising agency. Established in 1993, the agency has worked with a host of blue-chip companies and brands, producing some of Canada's most effective and memorable advertising.
SOURCE Narrative PR
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