Consumer Products & Services

Customers Opt for Value-for-Money-Products

In the changed scenario, customers around the world are looking for value. For example, U.S. consumers looking to save on high gas prices and utilize the dollars saved in buying household products, would prefer to buy energy efficient cars replacing their gas guzzling SUVs which they fancied over the decades. To kick start the economy and save on energy, the U.S. Department of Transportation has launched a scheme – Cash for Clunkers (now called CARS) or CAR Allowance Rebate System. The scheme offers cash incentives to encourage people replace their old, less fuel efficient vehicles by purchasing new, more fuel-efficient models. The program, which started on July 1 and ended on August 24, was designed to provide stimulus to the economy by boosting auto sales, and to put safer, cleaner and more fuel-efficient vehicles on the nation's roadways. Every dollar saved on energy could be used for buying consumer products – electronics, apparels and shoes, personal and household products, food products etc. − a positive for the consumer products industry.

Stimulus package to boost consumer spend

The American Recovery and Reinvestment Act of 2009 − the $787.2 billion economic stimulus package proposed by President Barack Obama and passed by the U.S. Congress in mid-February 2009 − is intended to help shorten the recession. The recovery package would create an estimated 3,675,000 jobs, 408,000 of which would be in manufacturing. The “Buy American” rules that Congress included in the U.S. economic stimulus package in February, would force many of the consumer product (CP) companies to shift their manufacturing base to the U.S. A recent analysis found that the application of “Buy American” requirements to recovery projects raises the number of jobs created by such projects by as much as 33%.

Also, Obama's tax rebates should encourage consumer spending; although, many argue it was not enough. With the recent flow of some positive economic news, the U.S. could now consider drafting a second stimulus package focusing on infrastructure projects. The $787 billion package approved in February has helped to stabilize the economy. Even though the impact of the first stimulus package is expected to be more conspicuous in the third quarter, many opine that a second stimulus package is still needed and should be directed at state and local governments as well as infrastructure spending. If considered and implemented, the U.S. may see economic growth rebounding in the first half of 2010.