NEW YORK — Given the primal choice of fight or flight when confronted with the stresses of today’s world, a significant number of women are doing neither.
Rather, they are responding by seeking adventure, engaging in what author-consultant Michael Silverstein terms a treasure hunt for a combination of good value, superior performance and emotional satisfaction in products and services they are seeking out and buying.
During speaking engagements that followed the publication in 2004 of Silverstein’s book, “Trading Up,” the author was approached by women who repeatedly told him he’d gotten only half of the story right. “I talked with around 100,000 people worldwide, and after every speech, women would tell me, ‘For every time I trade up, I trade down twice,'” he said in an interview. The experience moved Silverstein, a senior vice president at The Boston Consulting Group, to write “Treasure Hunt: Inside the Mind of the New Consumer” (Portfolio: $26.95), a 267-page follow-up, slated to be published May 8, in order to complete the picture.
Through analysis of macroeconomic trends and interviews with consumers, Silverstein offers his take on the well-chronicled squeeze on middle-market goods, as people increasingly trade up or down. Trading down — obtaining the best value at the best price — accounted for approximately $1 trillion of the $3.7 trillion in consumer spending in the U.S. last year, by Silverstein’s count, a figure he anticipates will rise to $1.5 trillion by 2010. Americans’ expenditures while trading up reached about $605 billion last year, up 13 percent from $535 billion in 2004, but 40 percent less than the dollars U.S. consumers dished out trading down.
More than three-quarters of the country’s consumers, 82 percent, consciously trade down in five or more categories, while nearly two-thirds, 62 percent, focus on just two categories in which to trade up. And they’re saving about $100 billion a year in the process, BCG estimated. (A survey taken this month by BCG found 92 percent of Americans like to tell others when they get a good deal, while only 8 percent like to talk about having paid full price.)
Eight broad categories are capturing the most trading-down dollars in the U.S.: homes; transportation; dining out; travel; food and beverages; personal items; fashion products, and home goods. In 2004, trade-down purchases of women’s apparel increased 9 percent over levels 10 years earlier, reaching $21.9 billion, and accounted for 23 percent of $95 billion in spending in the category. Trade-up buys of women’s clothing since 1994 grew by 9 percent, as well, hitting $29.5 billion in 2004, 31 percent of spending in the category.
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Although they control three-quarters of discretionary spending in the world’s developed markets, women tend to treasure hunt in just a few categories. “Women’s discretionary income per capita has increased dramatically, but they have a limited amount of time,” Silverstein said of women’s tendencies to confine their treasure hunting to a few areas.
Hence, the value sought in treasure hunting is not simply finding the lowest price. It is, Silverstein writes, “to determine the right price for the right product at the right time and place.” Shoppers make that determination, he added, based on a product’s technical value, performance, purchase excitement, point-of-sale marketing and emotional value.
The rising design quotient in a growing range of products — from Isaac Mizrahi wine glasses at Target to Motorola RAZR cell phones — is a “critical ingredient of their technical benefits and also translates into emotional benefits,” Silverstein related, adding a product’s design can telegraph a message about an item’s quality.
A successful treasure hunt “evokes a ‘wow,'” said Silverstein, 50, who noted his favorite places to trade down include Trader Joe’s, for chocolate-covered raisins, and Costco, for tiger shrimp and Dom Perignon. “I’m a big fan of Costco,” the author confided. “I like their guarantee that no brand will have a gross margin higher than 14 percent.”