Last week's contribution focussed on what could be the possible scenarios after the end of the recession with regard to work. This week's contribution focuses on what could be the consumer habits after the recession. In normal circumstances, once economic recovery picks up consumer expenditure will also increase. However, in the world's leading economies, there is little expectation that consumption expenditure will indeed increase. Although there is general consensus that there will be positive growth in 2010, there may not be much agreement about the nature of the recovery.

This is being caused by the expectation that high unemployment will be with us for some more time and the availability of cash for business growth may not be that readily available. This is in turn fuelling uncertainty on the part of the consumer and hesitation about how much to spend and on what to spend. Thus consumer trends are not easily identifiable and there are many who believe that, in spite of the end of the recession, expenditure patterns will not go back to what they were in the times previous to the recession.

The problem is that it is difficult to estimate now what these new expenditure patterns will be. There is also another factor to the whole equation for us in Malta.

In effect, with the wide usage of the internet, the increase in social networking, and the immediacy of news (we have all become fans of e-Bay and the like, Facebook and the like, and breaking news), trends that emerge in the western part of the world will not take too long to get to our shores. So, whereas previously one could anticipate certain trends in Malta, this will become less and less likely. Thus the question remains - what will the consumer be like after the recession?

One point that needs to be looked at is the importance of traditional values. We have been through a period where persons spend according to how much they can borrow. Will we now go through a phase where we spend according to our income? Will it become more fashionable to save rather than to borrow? In terms of what to do with one's surplus cash, the trend has been to move into riskier investments. Will we start to manage risk more conservatively? Will we shy away from excessive consumption expenditure in order to save for the rainy day?

This aspect links in to consumer needs. There are many analysts that believe that Maslow's hierarchy of needs (something that students have been lectured on, read about and examined on) will once more become very relevant. This hierarchy of needs starts at the base with physiological needs such as food, rest, water, and then moves up to the need for safety and security (such as job security), then to the need for belonging, then to the need for recognition and self esteem and finally to the need for self development and self actualisation. Are we likely to move from the higher levels of this hierarchy, (that is, consumption that was satisfying our need to be recognised and to develop ourselves) to the lower levels (that is, spending that is guided primarily by our basic needs for food and to feel safe and secure)?

This aspect then brings us to what represents consumer value. Thanks to innovative technologies, products have become increasingly complicated, with a host of added features. When one seeks to understand what these additional features mean in terms of benefits to the customer and, more specifically, what they mean to us personally, we find not much appeal in them.

Are consumers likely to become more selective in determining what products and services really mean to them and as a consequence how much they would like to spend on them? Will premium brands still have value to the average consumer or will their appeal become more restricted?

These are questions that that businesses need to find answers for. They need to evaluate constantly what is working for them in the market and what is not. They need to be on the look out for evidence as to which of their actions are having a positive impact. They will also need to be innovative, because the consumer will expect that they will also need to be flexible enough to change business strategy according to market requirements. The recession has presented and continues to present headaches to the business sector. The recovery will probably not be a stress-less experience, however.