Research: Which big dollar purchases consumers are delaying

3 Comments | This entry was posted in Marketing

In an ongoing effort to understand how consumers continue to adapt to the recession, we recently asked BIGresearch to explore with consumers what “big ticket” purchases they have either put off – or may never make at all. While tighter purse strings are a given these days, the results illustrate how priorities differ across consumer segments. The overall good news: retailers in the business of selling big ticket items can take heart, even if they have to be patient as some consumers delay some of those purchases for now.

A side note: unlike many of the studies that commissions, this survey is not specific to the Web. However, the results are entirely relevant to online retailers as consumers increasingly shop across channels. (For the flip side of the coin, I recommend reading also the list of consumer “untouchables”(i.e. what they absolutely won’t give up) that STORES magazine published in this month’s issue.)

So – we first asked consumers “As a result of the recession, which of the following major (big dollar) purchases are you waiting to make?” Top of the list: vacation travel, which over a third of consumers is putting off for now, with women taking a somewhat harder line than men on this luxury. Interestingly, income doesn’t seem to be the only deciding factor on this item – somewhat more high income earners ($50+K per annum) are putting off vacations than are those consumers earning less.

Next on the chopping block for approximately one quarter of consumers: major home improvement or repair projects (the irony here being that some contractors likely now have more time to return calls and maybe even negotiate, unlike in boom years past), furniture, a TV, a computer, and home appliances. Again, consumer segments reveal some differences for each of these. For example, 29% of 18 to 34 year olds are waiting to buy a new computer (presumably the old one works fine?) but just 17% of consumers aged 55 and older are putting off this purchase. Ditto for furniture. A quarter of consumers earning less than $50K per year is putting off buying a new TV, compared with one fifth of those earning more (perhaps the latter already bought a great TV not long before the economy took a tumble?).

What about purchases that consumers had in mind to purchase at some point but now think they may never make at all? Overall, vacation travel (25%) and major home improvements / repairs (20.3%) appear furthest out of reach for some consumers. Perhaps not surprisingly, one quarter of consumers aged 18 to 34 think they may never buy a house, more so than all other age groups. The good news: overall, few consumers seem to think they’ll never be able to buy new big ticket items such as consumer electronics (e.g. a digital camera, a DVD player, etc.), jewelry, furniture, and the like – even if a few are putting off those purchases for the immediate time. Members can download the full, segmented results now. Let me know your thoughts and comments!

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  1. Posted February 18, 2010 at 1:43 pm | Permalink

    Being in a travel space, the research findings here are of keen interest — and not surprising. But to qualify it a bit, American’s view their vacations as a right and generally find a way to take them one way or another. It’s a discretionary expense that people fight hard to keep in the mandatory category when push comes to shove. No doubt the fact that we offer a way for folks to take in the sights and spend less in the process helps us in a recessionary environment, but that alone doesn’t account for the fact we saw strong growth in 2009. The 90% employed are still willing to jump at a deal be it in retail or in travel. And its not just because it makes things more affordable – in the current environment people need what I call “ego-expressive air-cover.” Both in their own minds and with their peers in a time when it is no longer cool to be seen to consume. So going to Hawaii for a few days clearly breaks solidarity with the new frugality, but if you can rationalize it with yourself and those who might look at you disapprovingly, then you get to get a much needed break from the new normal. “Yes we went to Oahu for a long weekend, but the flights were a steal, the hotel was half price and we had this card that got us into everything for free!” Particularly in Hawaii, the fact we offer a discount on sights and activities isn’t going to get people who NEED a deal to take the trip. People that travel to Oahu – one of our strongest growing destinations — are still solvent and paying their mortgages. But they want and need to feel smart and responsible in the current environment. I think that’s why we’ve had a good run and why folks like RueLaLa are going strong in the luxury category. The lesson is not strictly about discounting to drive counter-cyclical growth, but about making your customers feel smart. I realize I’ve done a bad job making this case by pointing out two cases that are all about discounts(!), but there is definitely something to this about the fact people will “consume” so long as you can help them not feel and appear wasteful by doing so.

  2. Posted January 5, 2011 at 10:19 pm | Permalink

    Most states have incorporated new tax incentives of the purchase of Energy Star Appliances when replacing old appliances. These incentives can be quite sizable (up to $1500). Hopefully this will be a sufficient incentive for a few of us to step-up and make needed appliance purchases in spite of a soft economy and our reluctance to spend. Lord knows consumers and retailers alike could use a little stimulus right now.

  3. Posted February 3, 2011 at 1:54 pm | Permalink

    It’s amazing to think that many 18-34 year olds believe they’ll never own a house, especially when interest rates are at rock bottom rates.

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