We began to recognize shifts in societal values in consumer behavior -- what we came to call a "spend shift" -- in how people define and pursue what they now consider the good life and what they expect from the marketplace. Fifty-five percent of all Americans are part of this movement, which, in light of the "Great Recession," is a return to old-fashioned virtues, such as self-reliance, thrift, faith, creativity, hard work and community.
Far from being radical frugalists or new-age anti-materialists, these people look more like typical American consumers. They are just as likely to be liberal or conservative, young or old, or living in the North or South. As ordinary people find themselves less rich, they realize how they spend is a form of power, which they are using to communicate their values and reward those companies that truly reflect them, whether they are pro-environment, anti-bailout or some other issue. In this way, each dollar resembles a vote and every day is Election Day for companies in the marketplace. Seventy-one percent of consumers now make it a point to buy from companies whose values are similar to their own, while two-thirds avoid companies whose values they don't share.
How is the consumer changing? Here are five faces of the spend shift.
1. The New American Frontier -- the values of optimism, resiliency and opportunity
Despite the hardships, Americans are not defeated by the recession. Many are even reinventing their lives, careers and neighborhoods. Sixty percent of people feel that, since the recession, they're actually more capable of starting their own business. We found optimism and inspiration in Detroit, where the 80,000-seat Silverdome stadium sold for $583,000 -- roughly the equivalent of a studio apartment in Manhattan. Yet a resurgent civic pride is uniting a small but undeterred community of citizen-entrepreneurs set on rebuilding their city with new industries and local cooperation. Patrick Crouch of Earthworks Farms has helped turn vacant blocks into farms producing everything from salad greens to jarred preserves. Mr. Crouch's urban farm is helping to change the character of devastated neighborhoods, and raise inner-city employment. He teaches other city farmers which crops yield the greatest profit, and he says a handful of properties now under cultivation will soon be profitable.
2. Don't Fence Me In -- the values of retooling, education and betterment
Today, 64% of Americans feel that, "since the recession, I am interested in learning new skills, so I can do more myself and rely less on others." Leslie Halleck was one of the first in her Dallas neighborhood to start raising chickens in her backyard. This shift from consuming to producing is part of a more self-reliant lifestyle, where thousands of people across the country have started to produce their own eggs for safety and profit. Ms. Halleck went one step further, creating a business to train and supply the growing number of locals who raise birds and collect eggs every day. Her first Saturday class drew more than 100 people. The "unconsumer" is a growing trend: 23 million Americans grew their own food last year. As for Ms. Halleck's neighborhood, the Dallas city council hastily passed an ordinance to legalize the expanding number of suburban chicken farmers.
3. The Badge of Awesomeness -- the values of nimbleness, adaptability and thrift
The badge of awesomeness is a phrase from Maura McCarthy, co-founder of Blu Homes, which bucked the downturn in real estate by offering energy-efficient, low-cost homes built with "green" materials. The breakthrough that makes this possible is a unique hinge-based design that lets Blu Homes literally fold a building into a package so small it can fit into a standard shipping container and be transported anywhere. These "anti-McMansions" suit America's growing appetite for nimbleness and flexibility. Each home is modular, so an owner can grow into their home over time and avoid becoming over-extended. This shift from a credit to a debit lifestyle replaces acquisition with agility. Sixty-five percent of Americans feel that "since the recession, I realize I am happier with a simpler, more down-to-basic lifestyle." Fixed costs and overhead are pruned with "time banks" where members trade skills rather than spend cash, as well as micro-payments, ditching cable for Hulu and companies like Relay Rides, where you can rent out your car by the hour or day.
4. An Army of Davids -- the values of community, cooperation and expression
Individuals are discovering strength in numbers by scaling their spending. Here, new business models drawing on social behaviors foster cooperative consumerism. Sixty-six percent of Americans (and 87% of the spend shift) feel they and their friends can change corporate and institutional behavior by supporting those that "do the right thing." In Tampa we followed around a "carrot mob," which organized its spending clout to reward green businesses. Groupon, the group discounting phenomenon, mobilizes the masses with daily deals on products, services and even meals. The discounts are unlocked when a threshold number of people agree to pay for the coupon or "groupon." Founded in 2008 by Andrew Mason, Groupon has grown so fast that it now serves 40 cities, claims 1.5 million members and was recently hailed as the fastest company to reach $500 million in sales in the history of business.
5. We're moving from mindless to mindful consumption.
While consumer spending on a macro basis appears to be slowing, people are actually reallocating the way they spend, suggesting this is not a "new normal," it's a return to normal. The consumerism of the past 30 years is an anomaly, but that doesn't preclude growth for the company that understands value and values. Given consumer spending accounts for over 70% of America's GDP, consumerism itself is rewarding business that's about "better" instead of just "more." And in the post-crisis economy, there's hope and opportunity. The consumer is adaptable, business is adaptable and the future is not as dim as it appears.
|ABOUT THE AUTHOR|
John Gerzema is chief insights officer of Young & Rubicam, who, with his co-author Michael D'Antonio, a Pulitzer Prize-winning journalist, interviewed 50 companies across America for their new book "Spend Shift: How the Post-Crisis Values Revolution Is Changing the Way We Buy, Sell and Live."