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The Recovery: Will Shoppers Come Back?


Retail industry observers claim that the current recession will make fundamental changes to how most consumers spend, even when the recovery comes and shoppers loosen the purse strings again. But to say all consumers are pulling back equally, or developing the same new habits, would gloss over the many global and demographic distinctions. Some luxury-goods shoppers are quickly dropping designer brands while others are merely becoming conscious of spending a little less. Younger consumers are turning more to social media to help them make purchasing decisions. And according to the Boston Consulting Group, just one-third or fewer of Chinese and Indian consumers plan to decrease their spending.

To get additional insight into individual consumers' changing habits, BusinessWeek spoke with shoppers around the globe. Here, a taste of how they're spending now:

Maria Anpilova, financial manager, Moscow:
I spend about 80% of my [disposable] income on clothes. That started a couple of years ago: My wages went up, and I let loose. In Russia, for so long we didn't have fancy things, so you spend whatever money you have on it. There were times when people had money, but the shops were empty.

I try to buy things abroad. You can get the same brands as you get here for a lot less. I'm going to Paris this weekend and will definitely stop by the shops. I like Armani and Patrizia Pepe, Hugo Boss, and Schumacher.

But my point of view is starting to change. My husband lost his job three months ago. I'm still earning fine, but I understand it's time to retrain myself psychologically. If I find something I like, I don't have to buy it right away. I can think for a day or two and then if I really want it, that means I need it. Before, I'd get in these moods and buy things straight away. —Miriam Elder

Pamela Hall, interior designer, Princeton, N.J.:
In August we moved from Miami Beach to Princeton for several reasons. My husband, who owns a marketing firm, had some clients scale back. He got a job at a health-care software firm here. So many people we know from Miami have lost everything or are close to losing everything. Seeing that really gave us a whole other level of respect for what we have and how we spend our money.

In Miami, I'd go to Whole Foods (WFMI) and I don't think I ever walked out without spending $350. Here, the only thing I go to the supermarket for is diapers, crackers, and baby food. I just spent $65 at L.L. Bean for a raincoat, whereas three years ago in Miami I'd go to Burberry (BRBY.L) and pay $795. In our old house we had a high-end designer kitchen imported from Italy. Here, we just customized an Ikea kitchen. I found two out-of-work cabinet installers to install it for half the price. —Jena McGregor

Wang Yaodong, real estate agent, Shanghai:
My friends and classmates from college who work in the import or export industry are affected a lot by the financial crisis. But not me. Apartments in Shanghai one year ago were not selling very well, but now it's good and my income is going up.

I only spend about 3,000 RMB ($439) per month on transportation, food, and clothes. Even if I made 100,000 RMB per month, I would still spend just 3,000. I am a very good saver, and I plan to be rich. I go to the supermarket to compare prices. My wife and I buy goods only for our use. We never buy luxury goods—ever. Last December I started buying on the Internet. I use the Taobao Web site [the Chinese equivalent of eBay (EBAY)] to buy baby bottles for my daughter. They are quite cheap. Normally the shops offer no discount, but through the Internet you get 30% off. I buy baby lotion and baby shampoo, too. For myself, I buy underpants and socks.

I used to go to Starbucks (SBUX) to buy coffee. Now I'm more cautious. Many of my friends can't find jobs. I don't want to show that I'm a little richer. —Frederik Balfour

Alison Driscoll, advertising copywriter, Boston:
When I am undecided on a purse or a gadget, I ask my friends on Twitter some version of "What do you think?" I'm generally looking for validation about something I am on the fence about. Seeing their responses helps me make a decision. If they like it and agree it's a bargain, I know I want it. If not, I probably shouldn't get it. The people that I'm talking with on Twitter have more in common with me than some of my real friends. I've seen what a lot of these people talk about, and the stores and products they link to online.

My online network has expertise I lack. When I decided to buy a new digital camera I was too intimidated to search on sites like Amazon (AMZN) or Best Buy (BBY), because I don't know a whole lot about cameras. So I asked on Twitter. Out of the 12 responses I got, eight recommended the Canon (CAJ) PowerShot ELPH. I checked it out and liked it, so I ended up buying it.

Some of my girlfriends from high school think it's weird that I tweet all this stuff. They'll say, "Why would you ask these people?" I try to explain that it's the same thing as if you were next to me in the dressing room at the mall and I asked you if I should get something or not. It's the same, but it's actually easier and faster. —Douglas MacMillan

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