By Ellen Byron
The Juggle: Are You a Just-in-Time Consumer?
When the economy sank two years ago, Rebecca Seabern realized she could shrink her grocery bill just by eating into her crammed kitchen pantry.
"I had eight boxes of lasagna in there and a year's worth of paper towels," says Ms. Seabern, a 31-year-old accountant and married mother of two in San Antonio. Today, Ms. Seabern still has her job, but her antipathy to hoarding hasn't changed. "I've stopped purchasing things just to have them on hand," she says, preferring to make bigger mortgage payments instead.
The Great Depression replaced a spendthrift culture with a generation of frugal savers. The recent recession, too, has left in its wake a deeply changed shopper: the just-in-time consumer.
For over two decades, Americans bought big, bought more and stocked up, confident that bulk shopping, often on credit, provided the best value for their money. But the long recession—with its high unemployment, plummeting home values and depleted savings accounts—altered the way many people think about the future. Manufacturers and retailers report that people are buying less, more frequently, and are determined to keep cash on hand.
"Consumers are saying, 'I'm going to buy what I need for a specific period of time,' rather than loading up and buying two or three extra units just because they can get a good price on it," says Richard Wolford , CEO of Del Monte Foods Co. He calls the phenomenon "need it now."
Executives peddling wares from canned goods to cashmere say the shift in consumption habits is prompting them to change how they produce, package, price and deliver their goods.
Food and household-product manufacturers, including Del Monte and Kimberly-Clark /zigman2/quotes/201766540/composite KMB +1.85% Corp., are rolling out smaller package sizes for consumers who would rather buy a week's worth of toilet paper or dog food than stock up for a month.
Grocers are trying to accommodate smaller but more frequent shopping trips. Supervalu Inc. is changing displays more often. BJ's Wholesale Club /zigman2/quotes/203668982/composite BJ +0.09% Inc. is going after a new clientele of families and individuals by selling eggs and margarine in smaller lots.
Apparel makers and retailers such as Elie Tahari and Net-a-Porter.com are changing their production and selling schedules for shoppers who increasingly want to buy their clothes in season rather than ahead of time.
The new buying behavior is expected to be on full display this holiday season, which kicks into high gear the day after Thanksgiving, known as "Black Friday."
Shoppers are further behind in holiday shopping compared with previous years, with just 15.7% of their holiday shopping completed as of the week ended Nov. 14, compared with 20.5% completed during the same period last year and 28.3% in 2008, according to trade group International Council of Shopping Centers.
"There's going to be a pause before purchase: Consumers will ask themselves, 'Do I really need this, can I really afford this?'" says Thom Blischok, president of global innovation and strategy for SymphonyIRI Group, a market research firm. He expects a U-shaped purchase cycle, with big sales at the start and the end of this holiday season. "If I shop on Black Friday, I'll get a helluva deal, and if I wait a couple of weeks, I'm going to get another helluva deal."
So far, the impact of just-in-time buying on the corporate bottom line is mixed. Smaller unit sizes, for example, generally mean higher prices—and therefore higher profit margins for manufacturers.
Still, the phenomenon is so new it hasn't shown up broadly in earnings. A Kimberly-Clark spokeswoman notes that potentially higher profits on smaller packages can be offset by higher manufacturing costs.