Will consumers be big spenders again?
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, it’s clear we need big changes in our business models for manufacturing, retailing, financing and risk. We’re getting some painful supply-side lessons from this recession. But, its unprecedented ruthlessness is also improving our outlook because: (1) this recession’s depth is wiping out high-cost, inefficient boat and engine manufacturing; (2) we’re 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 we’ll embrace new reined-in lifestyles with downsized homes, cars and expectations -- I’ve sensed that something in this “new normal” message doesn’t add up! I’m not alone.
Neither does Grant McCracken, PhD, Cultural Anthropology at the University of Chicago. He is the author of six books on cultural studies including“Culture 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-Mart’s 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.
He’s 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 don’t spend to express our vanity or status, it’s much deeper. Spending is cultural! It’s 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 can’t see less!
Great! Then we’ll return to business as usual, right? Wrong. Consumers have changed. While, culturally, there’s no change in their desire for the good life (perfect for boating’s 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. They’ve 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. There’s no longer status in buying something that could have been purchased for less! In fact, it’s now viewed as reckless. Getting a good price is considered a sign of intelligence. You’re 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!
