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Navigating turbulent economic conditions: lessons from the UK and US retailing
Dr Daniel Hampson
5th March 2015
http://geert-hofstede.com/countries.html
http://geert-hofstede.com/countries.html
Consumer confidence indices
Consumer confidence
PRESENT SITUATION INDEX
FUTURE EXPECTATIONS INDEX
EMPLOYMENT SITUATION ECONOMIC SITUATION
PERSONAL FINANCE BUYING CLIMATE
EMPLOYMENT SITUATION ECONOMIC SITUATION
PERSONAL FINANCE
The Brazilian Economy; world’s 7th largest
The Brazilian Economy; recent volatility
The Brazilian Economy; recent volatility
The Brazilian Economy; recent volatility
The Brazilian Economy; recent volatility
The Brazilian Economy; declining consumer confidence
Re
cessio
n
The “Great Recession”; UK 2007-09
UK consumer confidence
Re
cessio
n
Research time-line
2008 2012 2016… 2010 2011 2009 2014 2013 2015
Managerial focus groups
In-depth qualitative survey
(USA, n = 254) Case-study research
In-depth triadic interviews
UK survey (n=1,211)
UK survey (n=1,300)
US survey (n=1,400)
US survey (n=1,350)
RECESSION
The team
Professor Peter McGoldrick
Retail Marketing
Dr Anthony Grimes
Marketing Communications
Dr Emma Banister
Consumer Culture Theory
Dr Daniel Hampson
Economic Psychology
Agenda
Psychology
Legacy
Heterogeneity
Society
More saving
More own labels
More spatial price
search
More purchase
planning
Less spending
Less ethical
consumption
Less store loyalty
Less impulsive
spending
Agenda
Psychology Legacy
Heterogeneity
Society
Ability to buy
Economic psychology
Willingness to buy
Extrinsic
Introjective
Intrinsic
1. Economic psychology
Perceived financial risk
Income/job insecurity
Value of illiquid assets
Cost of living
Permanent income/life-cycle
hypothesis/consumption smoothing
1. Economic psychology
Consumers tend to see only the nominal value of money
-2,0
-1,0
0,0
1,0
2,0
3,0
4,0
5,0
Jan2013
Feb Mar Apr May Jun2013
Jul Aug Sep Oct Nov Dec Jan2014
Feb Mar Apr May Jun Jul Aug2014
Average weekly wage
1. Economic psychology
Money illusion
-2
-1
0
1
2
3
4
5
Jan
20
13
Feb
Mar
Ap
r
May
Jun
20
13
Jul
Au
g
Sep
Oct
No
v
Dec
Jan
20
14
Feb
Mar Ap
r
May
Jun
Jul
Au
g 2
01
4
CPI
Average weekly wage
1. Economic psychology
Paradox of thrift Cordon, W.M. (2012). “Global imbalances and the paradox of thrift”. Oxford Review of Economic Policy, 28(3), 431-443.
1 Psychology: extrinsic
Kamakuru, W.A. and Du, R.Y. (2012), “How economic contractions and expansions affect expenditure patterns”, Journal of
Consumer Research, Vol. 39 No. 2, pp. 229-247.
Theory of relative consumption
1 Psychology: extrinsic
Frugality injunctive norm Hampson, D. and McGoldrick, P.J. (2015). “Consumer price consciousness: contemporary role and antecedents”. In review at
European Journal of Marketing.
1 Psychology: introjective
Alonso, L.E., Rodríguez, C.J.F. and Rojo, R.I. (2013), “From consumerism to guilt: economic crisis and discourses about consumption in Spain”, Journal of
Consumer Culture, DOI: 10.1177/1469540513493203.
Deci, E.L. and Ryan, R.M. (2000), “The ‘what’ and ‘why’ of goal pursuits: human needs and the self-determination of behavior”, Psychological Inquiry: An
International Journal for the Advancement of Psychological Theory”, Vol. 11 No. 4, pp. 227-268.
Social sanctions are replaced by internal coercion
1 Psychology: introjective
Moral obligation
Strutton, D. and Lewin, J. (2012), “Investigating consumers’ responses to the Great Recession”, Journal of Consumer Marketing, Vol. 29 No. 5, pp. 378-388.
1. Psychology: intrinsic
Smart-shopper self-perception Piercy, N.F., Cravens, D.W. and Lane, N. (2010), “Marketing out of the recession: recovery is coming, but things will never be the same again”, The Marketing
Review, Vol. 10 No. 1, pp. 3-23.
1. Psychology
https://www.youtube.com/watch?v=uCKgCkubGc0
1. Psychology
1. Psychology: intrinsic
“less is more lifestyle” Kotler, P. (2011), “Reinventing marketing to manage the environmental imperative”, Journal of Marketing, Vol. 75 No. 4, pp. 132-135.
1. Psychology: intrinsic
Thrift as fashion
“Shift their pride from new and expensive products to bragging about how little
they have spent by keeping older products”
1.Grewal, D., Roggeveen, A.L., Compeau, L.D. and Levy, M. (2012), “Retail value-based pricing strategies: new times, new technologies, new consumers”,
Journal of Retailing, Vol. 88 No. 1, pp. 1-6.
1. Psychology: an integrative model of recessionary thrift
Money worry
Price consciousness
Consumer guilt
Frugality injunctive
norm
Smart-shopper
pride
Hampson, D. and McGoldrick, P.J.
(2015). “Consumer price
consciousness: contemporary role
and antecedents”. In review at
European Journal of Marketing.
Agenda
Psychology
Legacy Heterogeneity
Society
2. Legacy
“When income rises, frugality gives
way to profligacy”
Nunes, J.C., Drèze, X. and Han, Y.J. (2011), “Conspicuous consumption in a recession: toning it down or turning it up?”, Journal of Consumer Psychology,
Vol. 21 No. 2, pp. 199-205.
2. Legacy
“New era of discretionary thrift”
Flatters, P. and Willmott, M. (2009), “Understanding the post-recession consumer”, Harvard Business Review, Vol. 87 No. 7/8, pp.
106-112.
2. Legacy
“New age of frugality”
Piercy, N.F., Cravens, D.W. and Lane, N. (2010), “Marketing out of the recession: recovery is coming, but things will never be the
same again”, The Marketing Review, Vol. 10 No. 1, pp. 3-23.
2. Legacy
“Permanent ‘scars’”
Lamey, L., Deleersynder, B., Dekimpe, M.G. and Steenkamp, J.-B.E.M. (2007), “How business cycles contribute to private-label
success: evidence from the United States and Europe”, Journal of Marketing, Vol. 71 No. 1, pp. 1-15.
2. Legacy
“Unemployment ‘scars’ because it ‘scares’”
Knabe, A. and Rätzel, S. (2011), “Scarring or scaring? The psychological impact of past unemployment and future unemployment risk”. Economica, Vol. 78
No. 310, pp. 283-293
2. Legacy: permanent scarring of economic crises
Schewe, C. D., & Meredith, G. (2004). Segmenting global markets by generational cohorts: determining motivations by age. Journal of Consumer Behaviour, 4(1),
51-63.
Generational cohorts
2. Legacy: cyclical asymmetry
Re
cess
ion
Lamey, L., Deleersnyder, B., Dekimpe, M. G., & Steenkamp, J. B. E. (2007). How business cycles contribute to
private-label success: evidence from the United States and Europe. Journal of Marketing, 71(1), 1-15.
2. Legacy
Agenda
Psychology
Legacy Heterogeneity
Society
Back to business as usual
“New normal”?
Cyclical asymmetry
Agenda
Psychology
Legacy
Heterogeneity Society
3. Heterogeneity
Beyond the “discretionary thrift” narrative
Alienating core market segments
3. Heterogeneity
Hampson, D. P., & McGoldrick, P. J. (2013). A typology of adaptive shopping
patterns in recession. Journal of Business Research, 66(7), 831-838.
The Maximum Adaptors
The Minimum Changers
The Eco-Crunchers
The Caring Thrifties
3. Heterogeneity (misunderstanding)
3. Heterogeneity (misunderstanding)
3. Heterogeneity; UK grocery retailer market shares
2008 2015
29.0%
5.0%
5.2%
31.3%
3.3%
3.0%
Agenda
Psychology
Legacy
Heterogeneity
Society
4 Society
Financial stressors:
Cost of living
Unemployment
Job insecurity
Wealth insecurity
Value of liquid assets
Stability of pensions
…
Santiago, C. D., et al. (2011). "Socioeconomic status, neighbourhood disadvantage, and poverty-related stress: Prospective effects
on psychological syndromes among diverse low-income families." Journal of Economic Psychology 32(2): 218-230.
4. Society
Eustress
Adaptive
Distress
Maladaptive
4. Society
Financial distress:
Material deprivation
Anxiety and depression
Social problems
Child delinquency
Aggression and domestic violence
Santiago, C. D., et al. (2011). "Socioeconomic status, neighbourhood disadvantage, and poverty-related stress: Prospective effects
on psychological syndromes among diverse low-income families." Journal of Economic Psychology 32(2): 218-230.
Life events Expected e.g., getting married
Unexpected
e.g., redundancy
Consumer –related
Perceived risk
e.g., financial risk
Service encounter
e.g., queues
Post-purchase
e.g., complaining
Stressors
Eustress
A positive
psychological/affective
response to a stressor
Distress
A negative
psychological/affective
response to a stressor
Adaptive coping
Engagement
e.g., problem-solving
Positive affect
e.g., pride
Maladaptive coping
Disengagement
e.g., denial
Harmful consumption
e.g., compulsive buying
Negative affect
e.g., guilt
Cognitive appraisal of
stressor Behavioural and
affective outcomes
Moderating variables
Affect dispositions
Locus of control
SES
Demographics
Personality
4. Society: a model of financial distress?
Agenda
Psychology
Legacy
Heterogeneity
Society