How bad is the jobless situation in America? Consider this: More people have been out of work for at least six months than live in the entire state of Missouri.
And these 6.2 million long-term unemployed residents aren't exactly deadbeats. Unlike in previous slumps, today's jobless are a diverse group, spread across age groups, industries and educational levels, say analysts. In other words, they are regular consumers whose tastes and buying habits are shaping shopping trends and marketer decisions.
Examples are everywhere. Depression-era retailer layaway programs are making a comeback. Dollar stores are thriving. Brands are selling smaller packages for cheaper prices for those living week to week (see related story, P. 40.) The downturn has even hit the greeting-card aisle, where Hallmark is selling job-loss sympathy cards. "Losing your job does not define you. What you do about it does," reads one. "I can only imagine how frustrating this job search must be for you," says another.
Still, few ad campaigns specifically target the unemployed, and that might be by design. "It's not something you do overtly because it's too easy for marketers to be questioned on their ... altruism when they do this," said James Lou, U.S. chief strategy officer for Omnicom's DDB. "It has to be subtle, and it has to be done quietly."
In fact, most efforts launched since the 2009 Great Recession don't speak to the long-term unemployed, but to those who have just lost their job or are worried about losing their jobs. For instance, JetBlue's "Promise" program—unleashed at the height of the recession in 2009—allows consumers to cancel flight plans and get a refund if they lose their job. Citi offers a "Homeowner Unemployment Assist" program that lowers monthly mortgage payments to an average of $500 for customers who have recently lost jobs.
But other marketers have discontinued their special offers. Hyundai last spring pulled an attention-grabbing deal first promoted in 2009 that allowed customers to return newly bought cars if they lost their jobs. The "Assurance" program now simply guarantees trade-in values at the time of purchase. "The job-loss-protection program was offered at a moment when consumers were postponing major purchases out of fear that they may lose their job," the automaker told Ad Age in a statement. "What we're seeing now is a fairly steady unemployment rate. While still high, it doesn't appear to be causing consumers to delay purchases in high volumes."
To be sure, September's jobless rate held steady at 9.1%, with 14 million people out of work. But the number of long-term unemployed—those without a job for 27 weeks or more—jumped to 6.2 million, up from 6 million in August, according to the U.S. Department of Labor. And it is this chronic long-term unemployment that sets this downturn apart from previous ones.
Additionally, the long-term unemployed from the 2009 recession are "more equally weighted across industry, occupation, education, gender and age groups, and ... therefore more representative of the labor force and the population than it had been two and a half decades ago," the Federal Reserve Bank of Chicago said in a report last year.
For marketers, of course, every problem brings an opportunity. Consider the "funemployed," a phrase being used to describe young people from wealthier backgrounds who aren't even trying to land real jobs because the market is so bad. "Instead, they travel on the cheap for weeks or devote more time to their hobbies," Daphne Kasriel, Euromonitor's Countries and Consumers Research Editor, said in an email. As a result, she said, these consumers are fueling demand for "the more affordable end of the tourism industry," as well as sports brands. But not everyone has the luxury of sitting on the sidelines. Only 41% of college seniors who applied for a job in 2011 got an offer, according to the National Association of Colleges and Employers.
And it is this expanding number of consumers who are barely scraping that are taking advantage of growing sales: Consider Family Dollar, which plans to open 450 to 500 stores in fiscal 2012, including its first move into California. But even Family Dollar has to adapt to the new reality, as it stocks its shelves with more private label-products to appeal to price-conscious consumers.
Other retailers are trying to hold on to their customers by bringing back layaway programs. Walmart is rolling out a buy now, pay later program for the holiday season. Toys "R" Us, which introduced layaway in 2009 for big-ticket items, just expanded it to include smaller toys. Sears Holdings Corp. began putting more marketing behind Kmart's layaway program in 2008, and demand has since doubled, the company said.