The analysis of spend trends in a sampling of our clients reveals the impact of the weak economy in the United States. We divided our client sample into (a) Large Spenders who spend more than $200,000 per month, (b) Medium spenders who spend between $50,000 and $200,000 per month and (c) Small spenders who spend less than $50,000 per month. Next, we compared the change in spend between Q3 and Q2 for 2008. The results are shown below.
The chart reveals that:
- On average large spenders have increased spend by 5%, medium spenders have decreased spend by 4% and small spenders have decreased spend by -15%.
- The standard deviation of the spend change was larger (by 20%) for the small spenders than it was for the large spenders. In other words, small spenders have responded more diversely on than the large spenders. While on average they have reduced spend, many have also increased their spending quarter over quarter.
The data shows that small spenders are being significantly affected by the current economic situation. Medium spenders have seen a slight decline in spend. The large spenders are bucking the spend trend perhaps with the aim to consolidate their current market positions.
Method of Analysis: We divided our client sample into three types based on spend levels. Next, we calculated the histogram of spend changes for all clients in each spend category. Empirical observations revealed that the distribution of spend changes was approximately a Normal distribution. With the calculations of mean and standard deviation, normal distributions were fitted to the histograms as seen in the chart.
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