Consumer data gathering or some would refer to as market intelligence or market research, is absolutely critical to any entrepreneurial endeavor. However, entrepreneurial businesses face unique issues in regard to gathering reliable consumer data and analyzing it for incorporation into their strategy. Start-up companies, with constrained financial resources, may have less access to these data, and fewer people are available on staff to complete more tasks. So to make it easier for you, here’s something I got from a source that helps consumers keep track of their spending. These are just snapshot data of present consumer economy.
While the global economic slump is spelling disaster for many of us, these data might be indicative of our economy as a whole, and if it is, it may not be bad as you might think. It’s raining rhetoric and blame shifting at the World Economic Forum in Davos Switzerland this week, and there’s little mention of hard data beyond calls for new set of rules and overhaul of the global financial structure. Fortunately, we have something to look at quantitatively. It will at least give us a glimpse into consumer spending trends that are valuable for all of us particularly entrepreneurs evaluating a start-up.
If you look at spending as a whole in 2008, we can see a phase change beginning in the summer. After a bump in the May/June time frame from tax refunds and credits, we see spending declined by $400 per month per household. Spending eroded even further (a $200 drop) in November along with consumer confidence, bouncing back only slightly for the holidays.
Looking by category from January to November, we see greater than 20% declines in entertainment (-22%), Home – including furnishings, services, and home improvement (-21%), gas/fuel (-32%), and travel (-24%). Spending also declined in food, shopping, and bills/utilities, with the only increase being spending on financial advisors as people look for help during uncertain times.
The average account balances is also interesting. From August to December, the average savings account was halved to $5,500. Fortunately, credit card debt remained roughly constant, but investments declined by 24%, while loans like mortgage, HELOC (Home Equity Line of Credit), student loans, and personal loans increased by 11%.
So what are these figures telling us? Maybe the global financial crisis is not that bad and starting a business this time of recession is not a bad idea either. Of course, I cannot answer that sharply. These are just qualitative hard facts that tells consumer business – that customers are spending $400 less each month than they were a year ago, have burned through half of their savings, and on average have taken on an additional $5k in debt. But always keep in mind that you can’t have a successful company without having the right data about customers, products and the market in general. It can also be an essential management tool for a viable business plan enabling any company to survive and thrive in today’s economic situation and competitive market conditions.
Tags: consumer data, consumer economy, consumer spending, financial crisis, global economy, market intelligence, market research, market trend
