Consumers will never go back to the way it was (until they do)

I won’t argue that thrift is in fashion right now. But I find it unnerving that so many pundits are predicting that extreme frugality is "the new normal." That forecast is both huge and a bit dangerous, in my opinion; it is an assertion based more on assumption than certainty.

Think of the things so many consumers have done… that their great grandparents could not have imagined. Many consumers have:

• Gone on vacation… by jet.
  
• Owned a home that would hold two (or more) of the houses their grandparents lived in.
  
• Purchased a television that out-sizes even the painting that once hung over grandma’s sofa (one that gets hundreds of channels, and which lets you change the channel without even getting out of your chair).
  
• Bought a hamburger for six bucks. And grabbed a cup of coffee… for four dollars or more.
  
• Carried a telephone that is not only wireless… but one which has no “base station” and that works from almost any civilized place on the planet.
  
• Used a laptop that probably has more raw computational firepower than the biggest computer in the world had at the time the first satellite was launched into space.

Implications: Our rate of savings has increased, and it will likely stay higher than it was a few years ago. Our use of credit has declined, and that trend is also likely to continue at some level. Our spending might face greater scrutiny, our pre-purchase research might be more diligent, and we might continue to expect more value per dollar than we even thought about a few years ago. I agree that we have entered an age of the more strategic consumer. But for anyone to suggest that now, we’re all going to go “cold turkey” and stop spending forever…

I think that’s ridiculous.

Last week, the New York Times published a story that reflected on the aftermath of 9/11. In it, the writer helped us recall many of the predictions that were made following this terrible and tragic event. Experts asserted that nobody would ever want to live or work in a skyscraper again… the streets would be patrolled by soldiers with rifles and the harbors by military gunships… tourists would not come back… people would probably never fly on airplanes ever again…

Each of these possibilities was easy to imagine at the time. We were in the midst of a trauma, and the worst was easy to imagine. While I’d never equate the human tragedy of 9/11 to the relative inconvenience of this economic recession, there are parallels in the way predictions have been made about the aftermath of this recession. We’re still very close to the financial trauma; close enough that it can cloud our vision of the path ahead.

I believe that, as the recovery develops, you’ll see evidence that consumption is a hard habit to kick. Consumers will start to rationalize purchasing with increasingly stronger (though not always logical) arguments…

• “C’mon. We haven‘t taken a vacation in like, forever!”
  
• “Do you know how long these same clothes have been hanging in my closet?”
  
• “I realize we need to be careful, but our old one died, and we can’t just not have a _______.”
  
• “I haven’t really indulged in anything like this in quite a while… so I’m not even going to feel guilty!”
  
• “I don’t know if we should wait… the deals are awfully good right now.”

To me, consumption is not a matter of if, but when. Some consumers will justify their return to spending sooner than others (some are already underway!). Some consumers will start buying in one or two categories, but continue their restraint in areas they don’t consider to be a priority.

Your job is to help start those internal arguments in favor of spending, and make your product, service, or experience one of those “exceptions to the rule.”

Mike Anderson