Why are consumers so full of contradictions when it comes to spending money? They buy a $500 leather jacket at full price but wait for a $50 sweater to go on sale. They buy a top-of-the-line sports utility vehicle, then go to Costco to buy new tires. They eagerly pay $3.50 for a cup of coffee but think $1.29 is too expensive for a hamburger.

The economy is booming. Unemployment is at a 25-year low. Real income has increased. Why isn't everyone out spending as they did in the 1980s? Why are so many companies struggling? What is this paradox? Is there a paradox? To understand the mystery, consider these three shifts in consumer attitude and behavior:

First, consumers today have a whole new frame of reference. For most Americans born in the past 30 years, Wal-Mart, Kmart and Target are full-line department stores. Macy's, Bloomingdale's and Dillard's are apparel stores - discount apparel stores at that. Their local entertainment venue is the mall. Their local food store is a food-drug combination store or a supercenter. Their convenience store is a drugstore. They buy paper products from a warehouse club and jewelry from television, send birthday greetings by e-mail, and purchase books and computers online.

Second, consumers have more money to spend but are still concerned about their jobs, despite the low unemployment rate. Acquisitions, consolidations and downsizing continue to hit the headlines. Digital and Compaq plan to merge, as have Continental Airlines and Northwest. Chase Manhattan Bank, the largest bank in the country, will cut 2,500 jobs; AT&T 3,000 and Nike 1,500.

Third, while consumers have money to spend they are very selective about where and on what they spend it. This past Christmas, for example, Neiman Marcus, Bergdorf Goodman, Prada, Gucci, travel, cell phones, gift certificates - all did well, as did Wal-Mart, Target and The Gap.

Anyone in the middle - JCPenney, Bloomingdale's, Macy's, Talbots - did poorly. Few items sold at full price. Consumers were smart enough to wait for January sales.

A new value system, different points of reference, concerns about the future, money to spend but an apparent reluctance to spend it - if ever there were grounds for a paradox, this is it. But is it really?

Since 1989, WSL Strategic Retail has conducted "How America Shops," a national study in which we talk to American consumers about their behavior and attitudes toward shopping. The recently published sixth edition, titled "The Consumer Paradox: The Threat to Loyalty in the New Millennium," makes clear what's actually going on and what companies must do to succeed and profit in the long term.

Paradox 1: Consumers say they have no time but are shopping more often and at more types of retail stores.

In 1997, consumers shopped an average of 2.4 stores "in the last week"; in 1995, they shopped 1.4 stores. (See Figure 1.) In 1997, consumers made an average of 3.5 shopping trips per week, up from 3.2 in 1995.

In fact, 36 percent of respondents made 4 or more trips per week, up from 30 percent in 1995. Yet, consumers say they have no time.

On a quarterly basis, they are shopping more compared to a year ago at traditional stores and new category types, as shown in Figure 2. With the exception of department stores, which declined in customer visits, mass merchandisers, home improvement stores and specialty stores are being shopped more than they were the previous year. Supercenters are now shopped once a quarter by some 36 percent of the population, yet many consumers still do not have access to them.

As for alternative methods of shopping, the Internet is becoming a player, with consumers already shopping online at more than half the incidence of TV shopping.

For further evidence that these time-starved American shoppers are shopping more, refer to Figure 3. With the exception of department stores and malls, consumers are shopping more than they did a year ago at all types of retail stores.

Paradox 2: Consumers are shopping more but buying less.

Through "How America Shops," WSL has developed a predictive index of merchandise categories that, over a period of time, has successfully indicated future trends in shopping behavior. The latest study included 11 such categories, as shown in Figure 4.

While consumers are shopping at more types of stores and more often, they are not buying everything in sight. They are spending their money on what they consider essential: food, personal-care products, clothing, prescription drugs, greeting cards. They are buying less of what they consider nonessential: cosmetics, fragrance, fashion accessories, collectibles, home decorating products.

Paradox 3: Selection is now the driver.

For the first time since 1989, selection was the No. 1 reason overall that consumers chose a particular store. In 1995, convenience was No. 1; in 1992, it was price.

This is what consumers mean by selection: always in stock, have what I want, unique merchandise, good selection, high-quality merchandise. There may be lots of stores selling lots of merchandise, but all you need to do is take a walk around the mall to see that much of what's available looks a lot alike.

What about convenience and price? The truth is, consumers want it all. Selection (65 percent), convenience (61 percent) and price (58 percent) - all rated very high. Consumers just keep "upping the bar."

And while price ranks third, it is still fundamental to consumers. They have not given up demanding low prices or fair prices every day. When asked whether they agreed or disagreed with the statement, "I am a sale shopper," 82 percent agreed (as they did in the 1995 study). This may come as a surprise, given the strongest economy in a quarter of a century.

Wise shoppers, changing demographics What's going on? The truth is, consumers today are not paradoxical at all. There are, in fact, two dimensions creating the appearance of a paradox.

The first is that consumers clearly and unabashedly define themselves in terms of their ability to get the best value from every shopping experience. They assess each category and each store to determine whether to spend. "Does the store have the selection I want every time?" "Can I depend on it consistently to fulfill my needs?" "Is my time well spent?" "Is the item indispensable to me?" "Did I get what I paid for?"

If not satisfied, they will move on - hence their willingness to shop more stores and to browse before they buy, and their refusal to buy merchandise or shop at stores they believe no longer meet their needs.

When consumers define themselves as sale shoppers, they are actually saying they are value shoppers. They are now sufficiently confident and experienced to know whether a product, service or store is worth the time or money spent - regardless of their income level or where they went to school. Eight out of 10 said so.

Second, the country's changing demographic diversity is creating the appearance of a paradox. Two consumer segments traditionally viewed as niche segments are now big enough to impact retailing as a whole. They are not only distorting the overall reality but creating a new reality.

Mature consumers, those 55 and older, and ethnic consumers (the universe of all non-Caucasians) are now sufficiently large and influential to drive the growth and decline of many retail outlets and product categories.

The 55-and-older segment now represents 33 percent of adults in the United States and 50 percent of the nation's disposable income. They are shopping less than their younger counterparts in all types of retail stores studied.

The overall declines in department stores and malls are being exacerbated by these consumers. The same goes with product categories: clothing, cosmetics, fragrances, home decorating products - all categories now at risk.

The growing ethnic communities - Hispanics, African-Americans, Asians - now make up almost 30 percent of the U.S. population. They are having the same powerful impact as those 55 and older, but in the opposite direction. In fact, ethnic shoppers are shopping more everywhere, offsetting overall declines in department stores and malls, which would be significantly worse without their business.

They also are having a positive impact on key product categories. If not for the ethnic shopper, the clothing category in particular would have declined significantly from a year ago.

Thus, the 55-and-older segment and the ethnic consumers pulling in opposite directions are creating the appearance of a paradox.

True blues To build loyalty in this environment, one must understand how the definition of loyalty has changed. Loyalty no longer is based on the emotional connection to a particular salesperson or store owner as it was in the 1950s and 1960s.

With very few exceptions, that connection no longer exists. There are too many stores with the same merchandise, too much personnel turnover and too little incentive for sales associates to "connect" with anybody.

Today, the loyalty connection is based on practicality, efficiency and expediency. Consumers will continue to shop a particular store (or buy a particular brand) as long as it satisfies their needs for product selection, convenience and price. This is part problem and part opportunity, since convenience and familiarity are easily diminished by one long checkout line or one out-of-stock item too many.

As a result, the consumer who has access to many other acceptable stores carrying the same merchandise at the same price will merely turn right at the traffic light instead of left and shop elsewhere. Or pick up the phone or go online and order direct.

The essence of loyalty today is how to become indispensable to consumers, how to assure them that every time they shop a store or brand they are guaranteed satisfaction. They must know that their time and money are well spent, that what the retailer or brand stands for satisfies what they want.

To be indispensable demands a commitment to selection such that consumers are guaranteed to find what they want every time they shop. That means a breadth and depth of merchandise that satisfies your target customers' needs. The one-size-fits-all approach no longer works in a highly segmented society where ethnicity and age impact shopping preferences. (Is it any wonder that specialty stores are seeing such increases in shopping while department stores are not?)

To be loyal, consumers also want convenience, but not just convenient location. Loyalty also demands efficient ease of shopping, with convenient presentation and good service every time.

Price is intrinsic to loyalty, but only within the broader context of consistency of value. Consumers have demonstrated they will pay more for their definition of value: $3.50 cup of coffee, $70 Broadway theater ticket, Prada jacket, Gucci bag.

But if they are not paying the lowest price, there is absolutely no room for slippage on quality of the product or service. A $3.50 cup of double latte had better be filled right to the top, the beans better be freshly ground and brewed, and it better be really hot.

Is it possible to build a loyal base of customers for the long term? The 1998 "How America Shops" study indicates it is, by the increasing number of stores shopped.

However, for those in the shopping center business, the challenge is still ahead. Retailers must create a distinctive, credible environment with improved selection, greater convenience and better value if consumers are to be loyal.

If consumers 55 and older cannot find what they want, they will take their 50 percent of U.S. disposable income and go elsewhere - or not shop at all. If ethnic consumers feel that their needs are not respected, they too will move on.

When 82 percent of American consumers agree to anything, it is no puzzle. "I am a value shopper. Address my specific needs. Give me a selection of unique products and services. Make yourself indispensable to me. And I will be loyal."

Paradox it is not!