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.

Boomers, Frugality and the Revolt against Consumerism

by James A. Bacon

Only in New York: Reeling from the financial catastrophe on Wall Street and fearing a collapse of the Sex in the City-style conspicuous consumption, fashion mavens have conjured up a new phrase, “recessionista,” to describe free spenders who are going down-market. Instead of buying $1,235 patent-leather satchels with golden accoutrements designed by Anya Hindmarch, reports the New York Times, these trendy young women are heading to Target (as in, tar-jay) to purchase similar purses by the same designer, but made of polyvinyl chloride, for $49.99.

Mass over consumption dies hard in the United States.

But New York may be not be typical. The rest of the country seems to be responding at a more profound level to hard times. In New Hope, Pa., the Ingram-Behre family overhauled a year ago its profligate lifestyle – dining out, shopping for entertainment, expensive cruises and trips to Disney World – with the goal of paying down debt and building its net worth. Predicting a “new age of frugality,” BusinessWeek described how the Ingram-Behres household now buys clothes at consignment shops, turns out the lights and often walks places instead of driving there. Earlier this year, the family saved enough money to pay off one of its auto loans.

The question is whether the new-found frugality is a temporary response to the shock of plummeting real estate and stock values, or does it foreshadow a fundamental shift in values and priorities? Are Americans going the “recessionista” route, in which extravagant spending will likely rebound as soon as the economy does, or are they following the Ingram-Behres by eschewing the ethic of “he who dies with the most stuff wins”?

Clearly, financial turmoil has filled Americans with a fear that impacts the here and now. The Consumer Confidence Index, updated Tuesday, stands at the lowest level since its inception in 1967. The Index plummeted to 38 in October from a reading of 61.4 in September.

But at the Boomer Project, we sense that there’s more to the story: Americans from all generations are turning their backs on the materialist, consumer-driven culture of the past. Read more.

("Viva the Vital" column republished from the Oct. 30, 2008, edition of the Richmond Times-Dispatch. Photo credit: The Great Dickens Christmas Fair.)

Here Come the Simplifiers

John Quelch, an associate dean at the Harvard Business School, foresees the rise of a new type of consumer in 2008: the "middle-aged simplifier." This group consists of well-off people who are turning their backs on conspicuous consumption and the accumulation of stuff. They don't define their social status by the size of their McMansions or the number of range Rovers in their garages. They value experiences over material possessions.

Writing in a Harvard Business Publishing blog, Quelch does not analyze this phenomenon in generational terms. But a generational dimension is implied. He notes that the group includes "empty-nester baby-boomers ... who are tired of heating unused spaces in cavernous mansions, now preferring smaller houses with architectural character and intimate spaces, more charm and less maintenance."

This analysis is consistent with Boomer Project research findings that today's Boomers define their self identities less by how they compare to others -- "keeping up with the Joneses," as it were -- and more by their own internal compasses.

Quelch identifies four salient characteristics of the Simplifiers:

• They have more stuff than they need. The temperamental opposite of pack rats, they want to purge themselves of excess possessions.


• They want to collect experiences, not possessions. They'd rather dine out, go on an adventure travel or learn a new sport than buy a vacation home, with all the responsibilities and headaches it entails.


• Their stuff embarrasses them. Big, gas-guzzling cars and big, electricity-guzzling houses convey conspicuous consumption, which in the era of rising green consciousness, is deemed irresponsible, if not downright anti-social.


• Their wealth is so assured it no longer requires conspicuous display. "They reject the marketer's continual pressure to spend more money on possessions rather than on education, health care and other social goods."

The Simplifiers pose a huge challenge to the marketers of traditional consumer goods. As the number of Simplifers grows, suggests Quelch, expenditures on stuff by this group will lag rising incomes. Consumer goods multinationals may find richer rewards focusing on emerging markets where "stuff" still has allure.

(Hat tip: Dick Stroud at 50-Plus Marketing.)

New Boomer-Focused Snack Food is Nutty

Frito-Lay has ventured into Boomer marketing with its first line-up of snacks targeted to Boomers. Called "True North," the line of all natural nuts and nut-based snacks are intended for Boomers who are looking for a more sophisticated and refined snack experience -- and can pay for it.

You can read about this week's launch at Brandweek.

Or venture over to the True North Web site for more information.

We'll be on the lookout for the print, TV and online efforts, to see how exactly Frito-Lay tries to connect with today's Boomer Consumer. At first glance, from the quotes in the Brandweek story, we're a little worried they've gone over the deep end by linking the current Boomer mindset towards self-fulfillment and self-respect and their line of nutty snacks. If they are treating it as a tongue-in-cheek connection, then we'll be okay with it. If they are serious about it, we're going to freak out about it.

People, get a grip. It's only a snack food.

The good news in this is that it is one of the few major players in consumer products to attempt to target a new product line entirely at Boomers. This could start a trend.