The economic downturn will certainly impact consumer purchasing power. But it will be a positive impact, not a negative one as many people assume… Just look at the new consumer slogan of 2008: “the middle-age simplifer.” They are surrounded by too much stuff. They continue to question whether all that stuff is worth the effort, despite the financial collapse. Buying luxury goods, conspicuous consumption, and cultural icons will become obsolete.
Simplicity – the new consumer trend
The consumer of the future will buy less durable, less flashy things: fast, but expensive, feature-rich, and light. The economic boom of the 1990s fueled consumption and democratized access to ever-wider goods; goods once considered luxuries became “must-have” necessities. Millions of people play the lottery or aspire to what they see on “Lifestyles of the Rich and Famous.”
As they get richer, the pressure on the less affluent increases. And as they buy, the pressure on the rich increases to buy even more: second homes, big-screen TVs, and the latest sports cars. The biggest houses are the ones that signify success with thousands of square feet of floor space, led by Bill Gates’s $50 million, 40,000-square-foot mansion outside Seattle. In 2006, 351 new homes exceeded 2,400 square feet, compared with 181 in 1986. Ironically, the number of such mansions has increased and are owned by absentee owners, while the average size of the American household has decreased.
Those giant homes have to be outfitted with more amenities, which is good news for the industries that make appliances and home goods. Even grocery manufacturers benefit. Bigger homes with bigger refrigerators can hold more food. The rapid pace of apartment building in developed economies puts enormous pressure on manufacturers of consumer durables to lead the growth.
Thus, the sale of durable goods depends on two things: the introduction of new, higher-priced, more-featured products that persuade customers to trade in their existing products before they break down (such as cell phones), as well as the penetration of household products, such as fax machines and printers, that were previously used only in business.
As the world economy slows down, one consumer segment will grow faster than ever. A simple consumer segment has four characteristics:
First, they recognize that they have more stuff than they need. Yes, they may collect a lot of things for fun (like porcelain figurines), but they resent people who fill attics and basements with things “you never knew you’d need.”
Second, they want to collect experiences, not possessions. And the gifts they give to friends and family are experiences rather than goods. Experiences are fleeting. They can’t be saved, except in the form of Kodak moments; but they don’t tie you down, don’t require maintenance, and allow for quick-fix enrichment. Going out to dinner, traveling abroad, learning a new sport will demonstrate greater resilience than waiting for a recession to happen.
Third, they are confused by their own stuff. Their undirected choices no longer affirm to the world that they are complex individuals with high social status. Too many of them simply go out of their way to make a clear statement about their social status. Worse, their stuff is an expression of irresponsible choices, of throwing money away.
Fourth, they have become so wealthy that they are no longer required to show off. They rent out their cars, rent other people's homes, and happily pursue other aspects of their lifestyles. They ignore the constant pressure from marketers to spend their money on goods rather than on education, health care, and other social goods.
These are the consumers who are now trading in their sports cars. They include Baby Boomers who live far from their children, who are less self-confident than before, who are tired of heating untouched areas of their deep mansions and now prefer smaller homes with distinctive architecture and more privacy, coziness and less maintenance.
Their families are scattered, they can't share the convenience of a big family home for the holidays, and they no longer want to be burdened with things they never use. High-tech warehouses and online auctions bring the simple people closer to those who haven't.
The growing segment of the simple people poses a challenge to marketing professionals. There are wealthy people who value quality over quantity and will not buy as much of the goods as their net worth increases.
Their declining consumption is undermining the expected growth in demand in developed economies and further slowing economic recovery, requiring consumer multinationals to focus more efforts on emerging markets – where commodities will continue to dominate.
According to Vietnamnet
