Friday, November 28, 2008

Boomer Consumers and the New Fru

A few weeks ago we reported on the "New Age of Frugality" that folks like BusinessWeek and others sensed was on the horizon.

Well, the "New Fru," as we like to call it, is here. Today's Wall Street Journal has three items that prove it:

  1. Full-page ad by DeBeers on the back page of the front section with the headline "Here's to Less." The short copy is all about our misguided interest in possessions that "we do not treasure." Enter the diamond, something that can be "passed down for generations."
  2. Article about the dramatic fall-off in luxury car sales in October and the first half of November. The reasons given are the recession, as well as a lack of desire by those with enough money to buy a luxury car to be so showy these days. Maybe this is a trickle-up mindset the very rich are learning from the rest of us.
  3. Essay about the rediscovery of a class of Americans who have been shunned for decades: those prudent Americans -- the ones who pay their credit card bills and save money.
In addition, a guest Op/Ed in today's New York Times by the chairman of Morgan Stanley Asia about the "Dying of Consumption" contains similar sentiments.

Based on all the signs, we're ready to predict the New Fru isn't going to go away when the recession ends, whenever that is.

The New Fru is a permanent shift in consumer behavior, driven by the "Perfect Storm" of a variety of factors:
  • The "Great Depression"-like recession we're in is certainly the kick-start to this shift in consumer behavior. If you don't have much money to spend, you spend much less.
  • The emerging "Green" movement away from consumables and more toward renewables is another factor. Fully 80% of Americans in our recent "Green Matters" study either think or act in environmentally responsible ways. Our grandparents and great-grandparents never threw anything of use away. They couldn't afford to. In short order, our kids and grandkids will be doing the same. It's a life lesson they won't forget.
  • Boomers, the consume-now-and-pay-never generation, have reached that stage of life where the goal is less about acquiring more materials things and more about acquiring better and more enriching experiences.
Modern marketing as we've known it since the emergence of TV has been all about consume, consume, consume. The more you consume, the better a citizen you are -- you're fueling the economy. But that's going to change as consumers embrace the New Fru mindset.

Interestingly, consumers understand the New Fru better than our government leaders do -- they still want to bail out banks and the auto industry, and send us "stimulus checks" so we'rell go spend and be good consuming citizens. But we're not going to spend. We're going to pay down debt and save. Pretty soon, we're going to want the government to do the same (probably within two years -- to borrow from Joe Biden, mark our words).

We're report more on the New Fru mindset and try to offer suggestions to help marketers make the shift. Some, as we've reported, are ahead of others.

One good starting point is to spend 20 minutes watching The Story of Stuff over this holiday weekend. Even if the facts cited are off by 50%, it's quite an eye-opener for anyone trying to understand consumer behavior.

1 comment:

CathyS said...

I absolutely agree that as Americans we have to rethink our spending habits. The interesting question is how are we going to reshape our economy.

In the 1950's there were high paying factory jobs that relied on low skill. In recent years low skill jobs have been relegated to low paying jobs-retail being a part of that. What do we now do with all these low skill workers?

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