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Consumers Are Spending On Experiences And Quality, MasterCard Says

The Great Recession hasn’t really made consumers spending-averse — but they’re spending in significantly different ways. That’s the word from MasterCard Advisors’ senior VP Sarah Quinlan, whose analytics team sifted through billions of retail purchases to figure out why retailers aren’t seeing better results, The Washington Post reported.

In a presentation last week at the Global Retailing Conference in Tucson, Arizona, Quinlan said one place consumers are dropping money is in restaurants — year-on-year sales growth for U.S. restaurants has been rising since last August. Americans “have no time,” Quinlan said. “People pick up the kids from soccer practice and they go out to dinner, because they want the experience of being with their family.”

Spending on air travel is also up, Quinlan said, arguing that’s a sign of what MasterCard is calling “the experiential spender” — consumers paying for experiences instead of conventional retail buying.

But adding some nuance to that appraisal is the fact that consumers are also willing to spend on big-ticket items such as automobiles and jewelry, according to Quinlan. She said fine jewelry has seen sales growth every month for the past two years, with an average purchase price of $2,400.

However, the slides Quinlan presented with her talk also show that, except for December, sales growth has been dropping since last summer. And in February, auto sales fell by the most in a year, according to separate data from the U.S. Commerce Department.

What’s clear from the big-ticket purchases is that many consumers aren’t actually skittish about spending per se, Quinlan said, adding, “If she’s buying a $34,000 car, she has no problem coming in and buying a $200 sweater.”

While consumers are spending on some items, they’re using fewer credit cards to do it, carrying an average of four instead of the pre-recession average of eight. They’re also more inclined to pay off their balance at the end of each month. And they’re more focused on value — meaning quality that will last, not just low prices. “I’m not going to buy a $300 pair of jeans for my teenager who outgrows them in two months,” Quinlan said. “That’s so 2007.”

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