John Gerzema–who guides the brand strategies for companies such as McDonald’s, Coca Cola, and BMW–gave a Ted.com talk on thoughtful spending which he begins by announcing that thirteen trillion dollars in wealth evaporated during 2008 and 2009. Then he adds that something positive can come out of this.
Before the current financial crisis, we binged. We super sized our meals, spent lavishly on goods and services we didn’t really need in order to impress our neighbors, succumbed to pressure from marketers to upgrade our tech gadgets on a yearly basis, and so on and so forth.
The personal debt to income ratio in the US went from 65% to 135% in the span of about fifteen years. Gerzema argues that the consumer drove us headlong into the crisis we face today.
However, since the crisis began, savings have gone up. Spending has dropped to its lowest level in over sixty years. Visa reported that more people are using debit cards instead of using credit cards. That is, we’re paying for things with money that we have instead of going further into debt. We’re also being much more careful with our savings and how we invest.
Overall, we’re moving from mindless consumption, to mindful consumption. People are moving toward aligning their values with their spending, and driving businesses to not just be about more, but to be about better.
Gerzema identifies four major cultural shifts driving new consumer behavior, and discusses how businesses are evolving to meet new consumer demands. These four major shifts are the following:
- Tendency toward a liquid life.
- Move toward ethics and fair play.
- Durable living.
- Returning to the fold.
Each of these four major shifts is discussed below.
Tendency Toward a Liquid Life
Success is no longer about having things, but about having liquidity. The less excess that you have around you, the more nimble footed you are. People don’t want to be locked into fixed costs.
In addition, déclassé consumption is in, which means that spending money frivolously makes you look anti-fashion. Pretense is out; it is now stylish to exercise restraint.
Move Toward Ethics and Fair Play
People are paying attention to a company’s culture and at their conduct in the market place. One example of a company looking to do good is Microsoft: given the high level of unemployment that the US is currently facing, they pledged to give free training in computer technologies to over two million Americans.
Transparency is also something that the marketplace is valuing more and more. The high-tech materials company W.L. Gore & Associates–which has a very egalitarian workforce philosophy–places their executives’ expense reports on their company web site so that everyone in the company can see them.
Patagonia clothing company is a designer of outdoor clothing and gear. Their mission is to make the best products and cause no unnecessary harm. Every day they do something to lessen their ecological footprint, and they keep something called The Footprint Chronicles which allows the consumer to track the impact of a specific Patagonia product from design to delivery.
Emphasis on Durable Living
Consumers are looking for ways to extract value out of every purchase that they make. For example, people are holding on to their cars longer than ever before. Also, there’s an emphasis on both clothing and shoe repair.
This isn’t in Gerzema’s Ted.com talk, but the artist and designer Alexander Rose indicates that just as there is an emphasis today on the slow movement, there is also an emphasis on long-term thinking. He adds that this has given him a fresh view on product design, and the planned obsolescence in consumer products today. Rose says the following:
“I see more clearly how little need there is for all the consumption and waste. I like what [the inventor] Saul Griffith once said. Everyone should receive a Montblanc pen and Rolex watch at birth, and then they’d never need to replace them in a lifetime.” (Source).
There is also a movement toward being sustainable and being able to take care of yourself. This can be seen in the fact that more and more people are growing their own vegetables, and even keeping their own chickens.
Returning to the Fold
Recently there’s been a rise in community-mindedness. For one thing, people are looking more and more to their neighbors as their support system. Also, co-operative consumerism has taken off: consumers work together to get what they want out of the marketplace. They pool their resources to incentivize companies to do good.
The artisanal movement is on the rise. People look for locally derived products and services, and they support their neighborhood businesses.
There’s also a rise in local currencies. Communities are printing their own money hoping to help residents make ends meet, as well as helping local businesses that have seen their sales drop due to the recession.
Generally it works as follows: individuals and businesses form a network to print currency. Shoppers buy it at a discount — it could be 90 cents for $1 value — and they spend the full value at stores that accept the currency. Consumers benefit because they get a discount on what they purchase, and the local businesses benefit from increased patronage. (Source)
Some communities in the United States have started to publish residents’ electricity usage. As a result, electricity usage in those communities has dropped.
In addition, Time Magazine wrote a few months back about a phenomenon called “cow-pooling”. This is basically for people who want naturally-raised meat, but who can’t afford natural-food-store prices. Friends and families band together to buy inexpensive, grass-fed meat directly from farmers.
Conclusion
In 1981 Duane Elgin wrote a book called “Voluntary Simplicity”. It was basically the Bible for those who were tired of working longer and harder, enjoying life less, and missing out on spending quality time with their family and friends, with very little to show for it, other than a mountain of perishable consumer products.
Today there’s a renewed emphasis on simplifying, not just because of the state of the economy, but because people want to live their lives around what really matters to them and, to quote Elgin, live “in a way that is outwardly simple and inwardly rich.”
Gerzema concludes his talk by indicating that values-driven spending will force capitalism to be better, it will drive innovation, and it will make longer lasting products. This is a hopeful picture for our future.
Here’s John Gerzema’s Ted.com talk:
(Image from here).
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