How the recession has changed US consumer behavior

Companies waiting for a return to normality following the recession may be disappointed. Their customers have tried cheaper products—and actually like them.

DECEMBER 2009 • Betsy Bohlen, Steve Carlotti, and Liz Mihas
Source: Retail Practice

While the downturn has certainly changed the economic landscape, it may also have fundamentally altered the behavior of numerous US consumers, who are now learning to live without expensive products. Many companies with strong premium brands are anticipating a rapid rebound in consumer behavior—a return to normality, as after previous recessions. They are likely to be disappointed.
New McKinsey research1 found that, in any given category, an average of 18 percent of consumer-packaged-goods consumers bought lower-priced brands in the past two years. Of the consumers who switched to cheaper products, 46 percent said they performed better than expected, and the large majority of these consumers said the performance of such products was much better than expected. As a result, 34 percent of the switchers said they no longer preferred higher-priced products, and an additional 41 percent said that while they preferred the premium brand, it “was not worth the money.”
As a result, a growing number of consumers are now in play. The percentage up for grabs varies by category and depends on how many consumers switch from higher-priced brands, their experience with cheaper ones, and the way they revise their buying intentions.

Taken from http://www.mckinseyquarterly.com/Retail_Consumer_Goods/Strategy_Analysis/How_the_recession_has_changed_US_consumer_behavior_2477