Allen Valahu
+33 1 53 23 57 54

November 01, 2002
Despite Sluggish Economy, Consumers are Willing to Spend More, According to Accenture Research

But Companies that Downplay Innovation in Favor of Cost Cutting Could Discourage Consumers from Buying

NEW YORK; Nov. 1, 2002 Despite government reports indicating that U.S. and European consumers have trimmed their spending due to the weakened economy, new research from Accenture (NYSE: ACN) shows that consumers are willing to spend more on products and services, but only on those that are innovative and offer features meaningful to them.

The survey findings indicate that consumers are not opposed to spending money, even in a troubled economy. To the contrary, the Accenture research found significant latent consumer demand for products and services across all economic and geographic segments, a strong preference for quality over price, and a desire for a broader range of products and services from which to choose.

The research report, “Consumer Attitudes Toward Innovation,” is based on a survey conducted by Accenture’s Institute for Strategic Change of more than 3,500 consumers in the United States and key European markets.

According to the findings, the products and services that consumers would be most willing to spend more money on include automobiles, consumer goods, electronics, household appliances and entertainment, but only if those products offered features more meaningful to them, such as by improving their physical health and well-being or providing intellectual stimulation.

“Consumers aren’t buying—or aren’t buying more—because money in the bank is more attractive than the product and service alternatives companies are giving them,” said Brian Johnson, a partner in Accenture’s Strategy & Business Architecture group. “The race to win on price has left consumers indifferent and desperate for product and service innovations that provide practical benefits.”

Although survey participants indicated they would like to see more innovation from companies, nearly one-third of them said they believe that most products and services created today have nothing new about them. In addition, three-fourths of respondents said they expect little meaningful innovation in products and services in the next two years.

Among the specific findings:

  • In the products category, consumers singled out the clothing/apparel, housing and home furnishings sectors for their lack of innovation.

  • Consumers feel very strongly that there has been no innovation of value to them in service categories traditionally viewed as innovative, such as healthcare (63 percent of respondents) and entertainment (54 percent of respondents) over the past two years.

  • Respondents were particularly critical of the lack of innovation in government, healthcare, investing and insurance, with more than 60 percent seeing no product or service innovation in these industries.

The survey findings also suggest that recent strategies focused on price innovations — targeting mass sales at the expense of margins — are becoming increasingly ineffective. Further, unstable consumer spending, fueled by deficit spending and low-interest financing, is placing long-term growth at risk.

Accenture’s research indicates that, to ensure long-term stability, companies should invest in market research and innovative products that provide meaningful benefits to their customers and drive them to part with their hard-earned cash. The research identifies three facets of innovation that strike a particular chord among consumers:

  • Innovations in “entry-level luxury.” A large majority of all consumers surveyed would like to see more lower-priced offerings from luxury brands. Nearly 70 percent of respondents said they prefer to purchase one superior product rather than multiple lesser goods.

  • Innovations in “life solutions.” Consumers believe there are many aspects of their lives that would benefit from better products and services, particularly two that relate directly to respondents’ quality of life: improving their physical health and sense of well-being, and helping them learn or providing intellectual stimulation.

  • Innovations in customer interaction. The majority of respondents said they believe that companies in general, and retailers in particular, don’t care about them after they purchase a product or service. Yet, three-fourths of respondents said they think a lot about how long a product will last before they buy it —suggesting that most consumers plan to own a product for some time and expect it to perform as designed for the duration of its useful life. The confluence of these two findings presents a significant opportunity for companies to enhance their relationships with customers and make new offerings more meaningful to individuals by providing better (and, ideally, tailored) post-sale attention and product maintenance services.

Survey Methodology
The survey, conducted by Accenture’s Institute for Strategic Change in September 2002, entailed querying more than 3500 consumers across the U.S. and Europe (France, Germany, Spain and U.K.). The multiple-choice survey was conducted entirely online. For purposes of this survey, innovation was defined for respondents as, “Entirely new products and services, or substantial improvements to products and services, which make them more valuable to consumers.”

About Accenture
Accenture is the world’s leading management consulting and technology services organization. Through its network of businesses approach – in which the company enhances its consulting and outsourcing expertise through alliances, affiliated companies and other capabilities – Accenture delivers innovations that help clients across all industries quickly realize their visions. With more than 75,000 people in 47 countries, the company generated net revenues of $11.57 billion for the fiscal year ended August 31, 2002. Its home page is