It’s Hard To Drive Purchase When People Aren’t Driving

When I filled up my Pathfinder yesterday, I realized that $3.54/gallon means a $70 tank–double what it cost me a short time ago. Naturally, this type of inflation has dire consequences for the economy.
For the first time since 1980, consumers are driving less. Last year, the amount of miles driven declined 0.4%. The previous two years had been flat. Prior to that, the amount of miles had grown 3-5% each year.
Brandweek explores some of the behavioral changes taking place as Americans keep it in “park.”

91% of consumers claim they have changed their shopping behavior due to various rising prices in the U.S. economy.
One of the categories getting hit the hardest is restaurants. Last year, customer traffic was up only 0.7%. More than half of financially challenged consumers surveyed said they are stocking up, preparing more meals at home and using leftovers.

The article also says Coca-Cola and PepsiCo will feel the pinch as transportation and raw materials costs rise. “It’s squeezing everybody’s margins,” said Gary Hemphill, managing director at Beverage Marketing, New York. “Beverages are price sensitive, there is only so much you can pass onto the consumer.”
Brandweek believes strong branding is more important than ever, as it’s that much harder to motivate purchase. I believe they are correct, but if gas prices continue to rise at this rate, it’s not going to matter much. People simply won’t have the disposable income it takes to make non-essential purchases.
[UPDATE] Now that I’ve had the chance to read the front page of Sunday’s New York Times, I see this topic is on the media’s mind. The Times says middle- and working-class consumers are starting to switch from name brands to cheaper alternatives.

In Ohio, Holly Levitsky is replacing the Lucky Charms cereal in her kitchen with Millville Marshmallows and Stars, a less expensive store brand. In New Hampshire, George Goulet is no longer booking hotel rooms at the Hilton, favoring the lower-cost Hampton Inn. And in Michigan, Jennifer Olden is buying Gain laundry detergent instead of the full-price Tide.



About David Burn

I wrote my first ad for a political candidate when I was 17 years old. She won her race and I felt the seductive power of advertising for the first time. Today—after working for seven agencies in five states—I am head of brand strategy and creative at Bonehook in Portland, Oregon.