Shoppers focus on quick-fix, feel-good purchases
— -- As the biggest shopping days of the year approach, consumers' buying habits are shifting dramatically from big-ticket items to less expensive purchases that are enjoyed and consumed quickly, a USA TODAY analysis finds.
Eating out, hair coloring and perfume are in. Cars, appliances and furniture are out.
Consumers are rewarding merchants who entertain them, save them time and make them look and feel good now rather than later.
What's different: People are accumulating less stuff — houses, cars, lamps, clocks. This money was saved early in the economic downturn but is now flowing to services and small items that can immediately boost a person's happiness.
Typical change: Consumers are spending more on wine, less on wine glasses. Spending on wine is up 14% during the recovery after falling 2% in the recession. "Wine is considered an affordable luxury," explains Gladys Horiuchi of the Wine Institute.
How preferences are changing, according to an analysis of Bureau of Economic Analysis spending and income data:
•Quality of life. Americans are spending a greater share of their income on pets and vets, spectator sports and disposable contact lenses — non-essential pleasures and upgrades that don't cost a fortune. Psychological counseling is also attracting the highest share of income on record.
•Prestige. Beauty products wholesaler Max Wexler calls the buying trend "masstige" — selling low-cost prestige products to the mass market. He's reinvented his business, Beauty Craft Supply & Equipment of Minnetonka, Minn., to sell upscale hair products that are available only at beauty salons. "Consumers may not be buying the most expensive conditioner, but they're buying one step down," he says.
•Driving. Americans put more money into the gas tank than the car itself. They dedicated just $1.67 of every $100 in take-home pay in the third quarter to buying a new car or truck while spending $3.51 of every $100 on gasoline. For most of the past half-century, that ratio was reversed — twice as much on the car as on gas.
Health care and gasoline are the biggest items consuming a greater share of income of an aging population — a record $18.68 of every $100 of after-tax income. That's twice what people spent on these items in 1970 when Baby Boomers were young and gas was cheap.
Spending habits are changing, but the love of spending is not. Consumers spent 93.1% of their after-tax income in the third quarter on goods and services, the most since the recession began in December 2007, government data show. Spending accelerated every month during the quarter. Early reports show October retail sales were strong, too. People spend the same share of income as they did during the 2000s and more than during the 1960s, 1970s, 1980s or 1990s.
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