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August 27, 2010

While Optimism for the Overall Economy has Declined, Survey Indicates a Slight Rise in Consumers' Intentions to Spend

Empathica Consumer Insights survey reveals that while Americans feel less confident about the economy than they did in the First Quarter of 2010, more are reporting an increase in spending.

Alpharetta, GA – August 27, 2010 – Empathica Inc., a leading provider of Customer Experience Management (CEM) solutions to some of the world’s most respected brands, announced that its Second Quarter survey of more than 11,000 American consumers reveals that the majority are spending more in today's economy.

Last quarter 67.2% of American respondents cited they were moderately to significantly cutting their spending, yet in Q2; this number fell slightly to 61%. Q2 also saw an increase in respondents indicating they were spending more (6.8%), compared to 4.8% in Q1.

Men appear to be slightly more optimistic than women, with 50.6% of men reporting that they expect their financial situation to be somewhat better in the next six months, while only 48.2% of women feel this way. Similarly 53.1% of women say they are finding more financial difficulty compared to six months ago as opposed to only 45.4% of men.

It should be noted that despite widespread pessimism for the "overall" economy, slight movement is detected in more consumers feeling better about their individual situations. In the next six months, 31.2% of consumers feel their financial situation will be somewhat better, as compared to 29.3% who cited that in Q1.

"The dichotomy of increased pessimism along with some increased spending perhaps can be attributed to the fact that individuals feel they are generally better off than their peers," said Gary Edwards, EVP of Client Services at Empathica. In fact, according to the Bureau of Labor Statistics report, the unemployment rate declined in June and remained static at 9.5% in July. Private-sector payroll employment, in particular, increased by 71,000 in July.

"Many people are realizing they have sacrificed long enough and are now in a position—or have a desire—to spend money on more discretionary items like hardware purchases or travel," continued Edwards. "Yet it's perceived that the overall economy still has a long way to go, to get back to where we were. In general, it appears that consumers are becoming more sophisticated in their response to the economic downturn. They may be spending more, but they're doing more bargain shopping. It's a more thrifty spend."

Coupon redemption, for instance, continues to drive consumer behavior. In Empathica's Second Quarter Consumer Insights survey, one in four consumers indicated they are seeking coupons online more often than ever before.

"Consumers still seek value in their purchases, and brands must accommodate this demand," added Edwards. "And when you're in a situation where consumers are in the mindset to spend, offering them extra value will be the opportunity to move from best current deal to actually boosting their brand loyalty. It eventually comes full circle. The more satisfied consumers are with their in-store and overall brand experiences, the more they will spend. Since consumer spending strengthens the economy, this can translate into more jobs and retail profits."

Richard Hastings, Macro and Consumer Strategist with Global Hunter Securities, LLC pointed to some potential reasoning behind the findings.

"Consumers are spending but the pattern of spending is generally more erratic than in the past, some of it the result of spending priorities, and some of it directly and indirectly influenced by social networking and tech," said Hastings. "One of the biggest challenges for retailers, brands and advertisers comes from this constant change in spending priorities. During certain months, certain age tiers will focus on clothing, then switch their priorities over to tech, and then back to clothing. For others, the swapping into and out of product channels creates challenges.

"The dollars might not be what they were four years ago, but the bigger issue is figuring out how to create more consistent spending patterns on a more profitable basis," Hastings added. "It looks like the consumer is figuring out how to use technology to step ahead of the trouble and spend in a new way."

About the Empathica Consumer Insights Panel:
The Empathica Consumer Insights serves as an authoritative voice on consumer based economic indicators; the retail, financial services and restaurant industries; consumer shopping intentions and customer satisfaction as reported by thousands of consumers in the U.S. and Canada. Results from Empathica's Consumer Insights, led by Dr. Gary Edwards and Empathica's Consumer Insights' team, are published on a quarterly basis. The results are based on outbound Internet surveys with Empathica's growing Insights Panel, derived from more than 30 million consumer surveys per year. Results have been weighted to reflect latest Census distributions in the U.S. and in Canada, including Region, Gender, Age and Income.

Aforementioned data is reported by the Empathica Consumer Insights Panel – Q2 2010, Issue 1.

For more information, visit www.empathica.com/insights/.

About Empathica:
Empathica provides Customer Experience Management programs to more than 200 of the world’s leading brands, ranging from multi-unit retailers, to banks and restaurants. Its rich analysis of survey data using state-of-the-art surveying and dashboard reporting software allows for performance-improvement solutions, evidence-based marketing insights, and customer experience management consulting. Annually, Empathica’s 30 million customer surveys in 17 languages reach more than 70,000 locations. A privately-held organization, Empathica is headquartered in Mississauga, Ontario, Canada and also has offices in Birmingham, England and Alpharetta, GA, in the United States. For more information about deriving actionable insights that enhance a brand’s operational excellence, visit Empathica at www.empathica.com

Media Contact:
Lauren Eichmann
Email: lauren.eichmann@walkersands.com
Phone: 312-265-3089

Empathica Contact:
Bruce Warren
Email: bwarren@empathica.com
Phone: 905-542-9001, ext 242



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