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A new study from ACNielsen says that Americans are the most cash-poor consumers in the world, with almost a quarter of all US consumers saying that once they have covered their essential living expenses, they have no money left over.

The US was tied with Portugal for this dubious honor, with 22 percent of consumers in both countries saying they have no spare cash. In third place was Canada at 19 percent, followed by the UK (17 percent), France (16 percent), the Netherlands (15 percent), Turkey (14 percent), Germany (13 percent), Chile (12 percent), and South Korea (12 percent).

According to the study, “While the U.S. may have the highest percentage of consumers with no spare cash, this number has dropped six percentage points since the last ACNielsen survey in May 2005. The improvement dovetails with other signs that U.S. consumers are trying to improve their financial situation. For example, of U.S. consumers who do have spare cash, their first priority for that money is debt repayment (42 percent). This number has increased nine percentage points since October 2004. Additionally, more than one third (35 percent) of U.S. consumers report putting spare cash into savings - up 12 percentage points since October 2004.”

The reported added that “other priorities for spare money include out of home entertainment (28 percent), new clothes (25 percent), home improvements and decorating (24 percent), and holidays and vacations (24 percent).”

The ACNielsen study also asked consumers what their priorities are in terms of balancing their budgets. Two-thirds said they wanted to cut down on take-out meals, followed by saving on gas and electricity (61 percent), cutting down on out-of-home entertainment (60 percent), reducing expenditures on new clothes (54 percent), driving less and saving on gas (47 percent), switching to grocery private labels (42 percent), delaying upgrading technology (41 percent), eliminating vacations (38 percent), and delaying the replacement of household appliances (37 percent). Other budget balancing techniques include using coupons more often (cited by 19 percent of consumers) and buying cheaper brands of alcohol (eight percent).

The findings are from ACNielsen's Online Consumer Confidence Study, a twice-yearly global survey that gauges consumers' current confidence levels, spending habits/intentions and major concerns. This survey marks the third in the series, the first of which began in October 2004.
KC's View:
Just look at three of the stories on MNB this morning. One has to do with how the global economy could cause profound changes in consumer behavior and the American standard of living. Another has to do with the difficulty of reaching so-called millennial consumers, who have far different media habits than their parents and grandparents. And now we have a story about how US consumers are among the most cash-poor in the world, which gives a whole new spin on the phrase “leader of the free world.” (It better be free or we won’t be able to afford it…)

It is absolutely imperative for retailers to address these changes now. Not tomorrow, not next week. Now. The retooling will be greater for some than others. But fundamental changes must be made, and new customer connections must be forged.

Because the old way ain’t gonna cut it.