Bookstores are loaded with titles these days declaring the country and economy will never be the same. This great recession has changed us forever, authors proclaim --- our new normal will be as frugal shoppers and savers.
No question, for our boating industry, its clear we need big changes in our business models for manufacturing, retailing, financing and risk. Were getting some painful supply-side lessons from this recession. But, its unprecedented ruthlessness is also improving our outlook because: (1) this recessions depth is wiping out high-cost, inefficient boat and engine manufacturing; (2) were getting rid of junk product makers; (3) shoddy dealers are being eliminated; and (4) needed efficiencies at every level are being realized.
However, when I read the pundits who contend as income, credit and confidence return, consumers will not return to the big-spending ways -- that well embrace new reined-in lifestyles with downsized homes, cars and expectations -- Ive sensed that something in this new normal message doesnt add up! Im not alone.
Neither does Grant McCracken, PhD, Cultural Anthropology at the University of Chicago. He is the author of six books on cultural studies includingCulture and Consumption and The Long Interview. He has also consulted with the likes of Coca-Cola, IBM, IKEA, Kimberly Clark and others.
The Harvard Press recently published some McCracken study conclusions in an article entitled Why American Consumers Will Spend Lavishly Again. When Wal-Marts CEO Michael Duke says, "People are saving more, consuming less, and being more frugal and thoughtful in their purchases," he is absolutely right . . . at the moment . . . but dead wrong in the future. When this recession ends, consumers will party like its 1999, contends McCracken.
Hes not just throwing around loose theories. McCracken has conducted hundreds of Ethnographic studies in consumer homes, listening two hours at a time. He says the commonly held explanations of irrational exuberance or cheap money for consumer spending totally miss the real mark. We dont spend to express our vanity or status, its much deeper. Spending is cultural! Its to fashion a life as we want it to be to build a good life we Americans know about, work for and expect. After all, we were all born into the richest, most successful society in world history. We simply cant see less!
Great! Then well return to business as usual, right? Wrong. Consumers have changed. While, culturally, theres no change in their desire for the good life (perfect for boatings future), the big difference is they will no longer pay a premium for it! This recession has taught even the rich to stretch dollars for maximum return. Theyve found they can do it well and they will continue for the long haul. Consumers will now seek what they perceive as value in all their purchases. Theres no longer status in buying something that could have been purchased for less! In fact, its now viewed as reckless. Getting a good price is considered a sign of intelligence. Youre admired if you can find something of value at a lower-price.
So, value is now the key trigger for consumers to write a check. We must now build products that are clearly a good value for the money. And, to sell them, we must convince our prospects what a great value their purchase will be. The value proposition now rules!