WEST PALM BEACH, Fla. — Are you ready for the "new normal"?
That's how financial experts are already referring to the post-Great Recession economy.
As we slowly climb out of the monetary mess of the past several months, we will see a measured shift in how customers spend and save their money.
How can you take full advantage of this shifting sensibility?
To find out, we gathered several business leaders for a roundtable discussion and spoke with leading economic observers by phone.
The result: the 10 Commandments of New Consumerism.
Thou shalt remember the basics.
Live within your means, especially when it comes to buying a home: Most experts advise that the purchase price should be no more than three times your annual household income, and the expense should be financed in a traditional way (think 30-year fixed).
"We used to have to talk people down. We'd have somebody coming in who made $70,000 a year and wanted that half-million-dollar house. ... Now, they're walking in the door with a certain level of discipline," said Derrick Berry, owner of Buccaneer Mortgage in West Palm Beach.
And don't forget about saving money: Most experts say consumers should be putting away 10 percent of their income (for retirement and other down-the-road needs). Keep an eye on financial products that will help you manage your money.
For example, BankAtlantic has introduced a seven-month "Personal Liquid CD" that allows penalty-free withdrawals. And don't be afraid to look online for money-market accounts that pay higher rates than what you'll find at local banks.
Thou shalt seek a bargain
Discount retailers are increasingly luring shoppers of all income levels.
Take Walmart, which has seen a surge of new customers: Not only is it redesigning its stores to make them cleaner and even more comfortable, it's also putting an increased emphasis on name-brand goods, be it a Sony camcorder or a Better Homes and Gardens patio set.
And Walmart has become style-conscious as well: Just check out its Norma Kamali collection and new Miley Cyrus clothing line, courtesy of fashion designer Max Azria, with items priced from $6 to $20.
(Miley herself says in the August issue of Elle: "I would pay $500 for the jeans that we make for $20 ... The jeans are my favorite part of the entire line. Because, like, literally, this is going to good for, like, Middle America, and it will be great for kids that really want to be in fashion but they don't have it available." )
Bargains abound at other retailers, too — and consumers are finding it really pays to comparison shop (and to see if retailers will make a deal, regardless of the posted price). "They're used to be a saying in our industry that before a customer made a purchase, they shopped one or two other stores. Today, they're shopping five," says Lenny Rosner of Rosner's, a decades-old Palm Beach County electronics retailer.
Thou shalt clip coupons
Coupons of all kinds, from the traditional clip-ready ones inside newspapers to promo codes that can be found online, are the new darlings of the marketplace. Consider the growing popularity of "mobile" coupons — sent to cell phones as text messages.
Or consider how much SouthFloridaDines.com, a local company that sells coupon-style discount certificates to restaurants (say, $10 for a $20 dining certificate), has grown. Just three years ago, the Port St. Lucie-based business offered discounts to 80 restaurants. Now, it has 350 eateries in its program. "It's now chic to save," said SouthFloridaDines.com founder Taylor Morgan.
Thou shalt put a premium on service
As they watched big-name companies collapse in the past year, consumers saw their faith in business tested. That's why customer-oriented, mom-and-pop retailers could fare better in this new economy.
Also driving this trend: The "buy local" movement that puts an emphasis on businesses based in your back yard.
Earl Stewart Toyota in North Palm Beach has seen its market share grow in recent years thanks to several service-driven initiatives, including providing customers immediate access to dealership owner Earl Stewart. "Value is not necessarily price," he says.
Thou shalt think generic
Why buy name brand when cheaper generic or private-label products are often just as good? Sedano's, the Miami-based Latin-oriented supermarket, has expanded its private-label Sedano's line from just two products (bottled water and sugar) in 2007 to 50 in 2009 — with another 80 in the pipeline.
"You used to see people who wouldn't buy private labels. Now that's what they shop," said Pedro Mesa of Sedano's.
Thou shalt think small
We're likely to live in smaller homes, drive smaller cars, maybe even watch smaller TVs. You'll give up space, but you'll reap the savings.
"You're certainly going to see change. In certain markets, you already see interest in smaller floor plans," said DiVosta and Pulte Homes Sales Director Chris Leimbach. But before you rush out to buy that three-bedroom ranch, keep in mind that most builders still have a glut of inventory, so there may be good buys in larger homes.
Thou shalt get cash back
Frequent flier programs have morphed into frequent shopper clubs and frequent diner programs. Cash-back or reward cards are found in just about every wallet. Even debit cards now come with rewards.
The lesson for consumers: Find a way to earn cash back or goods on almost anything you buy.
Thou shalt play the dynamic pricing game
You know it pays to fly off-peak. But increasingly, it pays to do just about anything off peak. That's because businesses are increasingly following the airline peak/off-peak "dynamic" pricing model to drive traffic during slower times.
Thou shalt look to Uncle Sam
If there's anything the recent Cash for Clunkers program taught us, it's that consumers will gladly spend money — so long as the government is making it easier for them. But while the car program has ended, there are still significant federal incentives to purchase homes (provided you're a first-time buyer) and energy-efficient air conditioners. And there's talk of a new "cash for appliances" program by year's end.
Thou shalt be in it for the long term
The days of buying (or leasing) a new car every three years are long gone. So are the days of flipping homes. You must retrain yourself to think of key purchases as long-term ones — it's the best way to maximize their value.
Cars can indeed be driven for eight to 10 years. Homes can last a lifetime (or at least the length of your mortgage). Chris Leimbach of DiVosta and Pulte Homes predicts a rise in the "age at home" approach, meaning home buyers will opt for properties that continue to suit them as they grow older — in other words, no staircases.
Sources: Colloquy Loyalty Census, Research provider Mintel, Walmart, the Promotion Marketing Association's Coupon Council.
Charles Passy writes for The Palm Beach Post. E-mail: charles(underscore)passy(at)pbpost.com. Staff researcher Niels Heimeriks contributed to this story.