November 5, 2008
Wealthy Commit to Saving Money and the Planet
Back
in 1986 Huey Lewis was telling Americans that it was Hip to be Square.
Today, Kelli Donley wants everyone to know “it’s cool to be cheap.”
Ms.
Donley, an executive at a non-profit group in Tempe, Ariz., told The
Wall Street Journal (WSJ) that much has changed in the last
year as she and her social circle have adjusted their shopping behavior.
Instead of talking about the latest buy of designer threads at Nordstrom
or other upscale department stores, today the talk is about a special find
at a thrift shop.
“Our
retail and manufacturing clients are seeing almost an aversion to consumption,” Todd
Lavieri, chief executive of Archstone Consulting, told WSJ. “In
previous downturns [such as in 1991 and 2001], we have often seen shopping
as therapy.” Today, according to Mr. Lavieri,
“People aren’t shopping to feel better. They actually are not shopping
to feel better.”
America’s
new frugal attitude is consistent with the emphasis of environmental issues.
Ms. Donley refers to buying second-hand apparel as “conserving clothing.” This
second benefit of not spending, some say, makes them feel even better about
going the non-material route.
J.
Walker Smith, president of Yankelovich, said his firm’s research shows
Americans moving away from
“freewheeling consumption” toward “a culture of responsibility,”
Pamela
Danziger, president of Unity Marketing, said some consumers have decided
that “spending money on luxury is a
poor use of resources in a climate of high gas prices and rising carbon
footprint.”
Wendy
Liebmann, chief executive of WSL Strategic Retail, told WSJ, “People
are saying, ‘We are going to save money, and we are going to save the environment.’”
Discussion Questions:
Are affluent Americans done with “freewheeling consumption” and
moving toward
“a culture of responsibility”? What does this mean for brands
and retailers?
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No way. I don’t believe it. If wealthy people want to prove how green they are, they can start cutting their own lawns instead of bringing in lawn crews that use gasoline powered blowers. They can downsize their homes so they don’t have to heat empty rooms. They can drive a Prius instead of a BMW 7-series that gets 18 miles per gallon. I’m sure there are people whose hearts are in the right place, but it’s doubtful that they’re making appreciable changes in lifestyle.
I don’t agree with the premise. It’s like saying everyone is buying “green” because there’s a cultural shift when if anything, it has been a marketing shift. People will still trade up, shop for what they want, feel better about themselves through purchases. Arm chair quarterbacking at this point feels entirely too early in the game. Especially with the huge step America took yesterday to affirm hope and confidence.
It is not as simple as some would have you believe. Just like we tell retailers, there is no mass market, there is no mass consumer. Currently, there is a consumer pull back. This is more likely a fad, not a trend. Housing is the financial base for most households. Current estimates are that housing will stabilize and return to growth in 2011. Once the bottom is hit and consumers will know where they stand, they will start spending. We will have 3 years of pent-up demand, which will take 2 years to satisfy.
I can only repeat the story that I have told in these discussions previously related to me from a personal shopper friend. This personal shopper works at a very upscale department store. Her clientele spends a minimum of $50,000 per year. Some spend as much as $250,000 per year. And that is at ONE store. She related how in the last couple of months her clientele has gone from not paying attention to the price to returning merchandise and experiencing rejected credit cards.
Perhaps if I was experiencing those kind of difficulties, I would tell my friends “I am cutting back to save the Planet” rather than “My credit cards don’t work”! While I think that the environment is a banner for the better educated and more affluent to carry, I do not think it is truly associated with ultra-consumption behavior.
Three months of terrible economic news does not make a permanent change in consumers’ buying patterns. More important are long-term trends such as high gasoline prices creeping higher, concerns about the environment, evidence of global warming, and consumers’ individual circumstances such as how secure they feel in their jobs, what is happening in their industry, and how consumer buying habits affect their company.
I think the consumption by wealthier Americans and being green are mutually exclusive. Being green is a change in culture and Americans reeling in their spending is another change in culture, but not necessarily tied in with being green. I never really thought that wealthy people were big spenders. All the real millionaires I know do their deals over coffee at McDonald’s, live in modest homes and drive older cars. It’s always phony credit card millionaires who are the big spenders; and the faucet is being turned off. These are people who take out loans to buy cars, homes and boats. If they lost their job working for the man, they would be in big trouble.
I don’t accept the connection between frugal shopping and environmental awareness. Sustainable products typically cost more, for one thing. These are overlapping, not necessarily connected, phenomena. Sustainability is, I suspect, a longer term trend. Materialism is likely to be back in style soon enough.
My feeling is that the current decline in consumer spending is but a temporary setback. As the new world order comes into place, credit will once again return to the marketplace stronger than before.
As I see how my customers spending habits change, I do not see a decline in consumerism, merely a change in the quality and price of what they buy. They are still buying, just not the same products. A discount widescreen TV at Walmart satisfies the same need as a widescreen from a pricey upscale electronics shop.
We have not learned the true meaning of thrift in spite of the high gas prices and mortgage meltdown. Already the rate of consumption of gasoline is increasing along with the declines in prices. Demand will continue to increase, and the price will shoot up again. The dramatic drop in housing prices has once again brought property prices within range of many people. The bailout of the financial sector, and the government’s demand that credit be loosened in an effort to boost the economy will put us right back where we were two years ago.
I give this economic downturn a lifespan of maybe twelve more months or so, and then retail sales will be on the rebound, maybe even before then. Those retailers who close shop now are doing so to the benefit of those who choose to stay the course. The drawback to that situation is that with a tighter playing field, prices will rise with the absence of competition. What I feel will be of interest in the long run is how emerging markets will affect the global economy, and the subsequent effect on the US consumers’ options.
In other words, if a chain is able to break into new markets, will they continue the price slashing and discounting model that has become the norm of late, or will they pursue an increasing price strategy to meet expenses incurred with this expansion? Maybe the future is beyond our shrinking borders.
In a day and age when the environmental impact of every tee shirt and pair of jeans can be measured, consumers are absolutely making the connection between conspicuous consumption and living green. My own recent decisions to buy better but buy fewer (yes, I’ve consciously decided to spend even MORE on clothing; focusing on investment pieces and steering clear of one season wonders and closet fillers) and to purchase a handmade, vintage diamond ring from the 20s (it was not cheaper but it was not a “blood diamond” and happened to be an original design that is widely copied in new jewelry) were driven by this. Brands and retailers that grasp these mitigators as a permanent change, rather than simplistically waiting for the economy to bounce back, will reap the rewards when things actually do turn around.
Americans are getting off the credit crack which left our economy strung out and almost dead. There are years of healing ahead for our people. This has not come without a price and Americans will be hurting for a time but we will be stronger for it. There are real people that needed credit to live but just giving them credit, I don’t believe, is the fundamental answer. For the rest of us change is here. With less being spent by customers, they can demand that companies pay attention to social and environmental responsibilities.
The only difference in my mind from crack dealers and financial institutions are that the debt enablers do not go to jail.
Tom Hanks and the Governator have long been rich celebrities with a Green focus. I agree with the post that mentioned that the Green twist is just a way of covering up for the maxed out credit cards.
The ultra-rich are still spending money, and likely doing it to a greater degree right now as people are forced out of their massive homes and big boats.
The rich are finally just admitting that the rest of us have learned to conserve and that their time has finally come.
To make such a generalization is good for copy but not entirely accurate.
There is a big difference between “middle- and upper-income”–and especially the former should NOT be “comfortable showing off $300 Gucci sunglasses and $8,000 Hermes Birkin bags”!!! While the sunglasses are within reach of middle-income earners, Hermes Birkin bags clearly are not.
This only serves to underscore how imperative it is for merchants–especially those serving affluent customers–to know their customers. For while there are those that will curtail shopping, there are still those for whom shopping is therapy and those for whom this type of consumption is still well within their means, even if they do it in a much less conspicuous manner.
Hopefully it is not just the affluent who are controlling their spending. I do think it is becoming more unpopular to spend extreme amounts of money on meaningless things just to flaunt your wealth. This is a characteristic few people have ever admired. Hopefully, all classes of people will learn to live within their means and the super wealthy will use their money to create new jobs or help people in other ways.
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No way. I don’t believe it. If wealthy people want to prove how green they are, they can start cutting their own lawns instead of bringing in lawn crews that use gasoline powered blowers. They can downsize their homes so they don’t have to heat empty rooms. They can drive a Prius instead of a BMW 7-series that gets 18 miles per gallon. I’m sure there are people whose hearts are in the right place, but it’s doubtful that they’re making appreciable changes in lifestyle.
I don’t agree with the premise. It’s like saying everyone is buying “green” because there’s a cultural shift when if anything, it has been a marketing shift. People will still trade up, shop for what they want, feel better about themselves through purchases. Arm chair quarterbacking at this point feels entirely too early in the game. Especially with the huge step America took yesterday to affirm hope and confidence.
It is not as simple as some would have you believe. Just like we tell retailers, there is no mass market, there is no mass consumer. Currently, there is a consumer pull back. This is more likely a fad, not a trend. Housing is the financial base for most households. Current estimates are that housing will stabilize and return to growth in 2011. Once the bottom is hit and consumers will know where they stand, they will start spending. We will have 3 years of pent-up demand, which will take 2 years to satisfy.
I can only repeat the story that I have told in these discussions previously related to me from a personal shopper friend. This personal shopper works at a very upscale department store. Her clientele spends a minimum of $50,000 per year. Some spend as much as $250,000 per year. And that is at ONE store. She related how in the last couple of months her clientele has gone from not paying attention to the price to returning merchandise and experiencing rejected credit cards.
Perhaps if I was experiencing those kind of difficulties, I would tell my friends “I am cutting back to save the Planet” rather than “My credit cards don’t work”! While I think that the environment is a banner for the better educated and more affluent to carry, I do not think it is truly associated with ultra-consumption behavior.
Three months of terrible economic news does not make a permanent change in consumers’ buying patterns. More important are long-term trends such as high gasoline prices creeping higher, concerns about the environment, evidence of global warming, and consumers’ individual circumstances such as how secure they feel in their jobs, what is happening in their industry, and how consumer buying habits affect their company.
I think the consumption by wealthier Americans and being green are mutually exclusive. Being green is a change in culture and Americans reeling in their spending is another change in culture, but not necessarily tied in with being green. I never really thought that wealthy people were big spenders. All the real millionaires I know do their deals over coffee at McDonald’s, live in modest homes and drive older cars. It’s always phony credit card millionaires who are the big spenders; and the faucet is being turned off. These are people who take out loans to buy cars, homes and boats. If they lost their job working for the man, they would be in big trouble.
I don’t accept the connection between frugal shopping and environmental awareness. Sustainable products typically cost more, for one thing. These are overlapping, not necessarily connected, phenomena. Sustainability is, I suspect, a longer term trend. Materialism is likely to be back in style soon enough.
My feeling is that the current decline in consumer spending is but a temporary setback. As the new world order comes into place, credit will once again return to the marketplace stronger than before.
As I see how my customers spending habits change, I do not see a decline in consumerism, merely a change in the quality and price of what they buy. They are still buying, just not the same products. A discount widescreen TV at Walmart satisfies the same need as a widescreen from a pricey upscale electronics shop.
We have not learned the true meaning of thrift in spite of the high gas prices and mortgage meltdown. Already the rate of consumption of gasoline is increasing along with the declines in prices. Demand will continue to increase, and the price will shoot up again. The dramatic drop in housing prices has once again brought property prices within range of many people. The bailout of the financial sector, and the government’s demand that credit be loosened in an effort to boost the economy will put us right back where we were two years ago.
I give this economic downturn a lifespan of maybe twelve more months or so, and then retail sales will be on the rebound, maybe even before then. Those retailers who close shop now are doing so to the benefit of those who choose to stay the course. The drawback to that situation is that with a tighter playing field, prices will rise with the absence of competition. What I feel will be of interest in the long run is how emerging markets will affect the global economy, and the subsequent effect on the US consumers’ options.
In other words, if a chain is able to break into new markets, will they continue the price slashing and discounting model that has become the norm of late, or will they pursue an increasing price strategy to meet expenses incurred with this expansion? Maybe the future is beyond our shrinking borders.
In a day and age when the environmental impact of every tee shirt and pair of jeans can be measured, consumers are absolutely making the connection between conspicuous consumption and living green. My own recent decisions to buy better but buy fewer (yes, I’ve consciously decided to spend even MORE on clothing; focusing on investment pieces and steering clear of one season wonders and closet fillers) and to purchase a handmade, vintage diamond ring from the 20s (it was not cheaper but it was not a “blood diamond” and happened to be an original design that is widely copied in new jewelry) were driven by this. Brands and retailers that grasp these mitigators as a permanent change, rather than simplistically waiting for the economy to bounce back, will reap the rewards when things actually do turn around.
Americans are getting off the credit crack which left our economy strung out and almost dead. There are years of healing ahead for our people. This has not come without a price and Americans will be hurting for a time but we will be stronger for it. There are real people that needed credit to live but just giving them credit, I don’t believe, is the fundamental answer. For the rest of us change is here. With less being spent by customers, they can demand that companies pay attention to social and environmental responsibilities.
The only difference in my mind from crack dealers and financial institutions are that the debt enablers do not go to jail.
Tom Hanks and the Governator have long been rich celebrities with a Green focus. I agree with the post that mentioned that the Green twist is just a way of covering up for the maxed out credit cards.
The ultra-rich are still spending money, and likely doing it to a greater degree right now as people are forced out of their massive homes and big boats.
The rich are finally just admitting that the rest of us have learned to conserve and that their time has finally come.
To make such a generalization is good for copy but not entirely accurate.
There is a big difference between “middle- and upper-income”–and especially the former should NOT be “comfortable showing off $300 Gucci sunglasses and $8,000 Hermes Birkin bags”!!! While the sunglasses are within reach of middle-income earners, Hermes Birkin bags clearly are not.
This only serves to underscore how imperative it is for merchants–especially those serving affluent customers–to know their customers. For while there are those that will curtail shopping, there are still those for whom shopping is therapy and those for whom this type of consumption is still well within their means, even if they do it in a much less conspicuous manner.
Hopefully it is not just the affluent who are controlling their spending. I do think it is becoming more unpopular to spend extreme amounts of money on meaningless things just to flaunt your wealth. This is a characteristic few people have ever admired. Hopefully, all classes of people will learn to live within their means and the super wealthy will use their money to create new jobs or help people in other ways.