[Author’s note: this is the second in a series of four blogs that capture the essence of a popular webcast I did in June called “Four Trends in Forty MInutes.” The webcast covered trends in Regulations, Lifestlyes, Demographics and Technology that will impact cities’, companies’ and the arts’ ability to retain and attract next gen citizens, employees and patrons, respectively.]
Just a couple years ago, the book Trading Up became a best seller. The premise: Americans may buy their underwear at Walmart, but will splurge on luxuries like Cartier, Tiffany, Mercedes.
Not anymore. Trading up seems passe; the book’s current market value reflects it: - you can get a new copy of Trading Up for $1.77. Used copies? Eighty-three cents.
Given today’s economic realities, “trading down” may be a more permanent trend. For the Millennials - coming of age in the Great Recession - decadence is out. It’s cool to be frugal; hip to make due (even if your parents are wealthy.) And this may not be a fad; trading down and living on less may be with us for up to a decade.
Although economists predict that we’ll begin to pull out of the recession by the fourth quarter of 2009, the frugal behaviors we’re learning may stay with us for much longer. Why? Because so many of us have been hit so hard. For a point of reference, it took our great grandparents over a decade to regain confidence in the economy after the Great Depression. (If you had a great Uncle Richard, like I did, you know that some never regained their confidence. Uncle Richard lived like a pauper for all of his life; no one knew he had gobs of money socked away in multiple places: drawers, CD’s, savings, land holdings.)
Some “downshiting” lifestyle trends that may last:
- DIY, backyard music concerts;
- Buying fewer items of higher quality (see t’shirt, at right);
- Gardening: raising your own produce, and learning to be a great home cook;
- Repairing what you have, rather than buying a replacement. Cobblers, clock’smiths, and even the Maytag repairman are busier than ever.
- Two-car families downshifting to single car families, or car sharing in cities like Madison that have it.
- Communal or multi-generational living.
What are the opportunities for savvy cities, companies, and arts organizations?
- Simplify. If you offers 6 different versions of something (a product, memberships, tickets), streamline down to fewer options. For example, if you’re a membership organization like a Chamber of Commerce, offer fewer membership levels and options. A clear, straightforward offer will be appreciated by your customers.
- Offer a ‘budget friendly’ option. How can you introduce people to your city, company or arts organization in a wallet-friendly way? In the arts, you might consider $5 tickets to attend rehearsals. Companies may want to offer a series of free or reduced-fee teleconferences or webcasts that help their clients solve a sticky problem. In economic development, you might consider decreasing the amount of financial incentives per year, but pffer them for a longer term.
- Recognize that the days of 2007-2008 fees, prices, salaries (and profits) may be long gone. Last week’s Commodity Price Index in The Economist (July 5, p. 89) showed that the percentage change in the prices paid for all items has fallen 32.8% in the last year, while food has fallen by 27.5%. Most of us need to rethink what we’re charging for things, and figuring out how to offer lower-cost options to buyers who are learning to downshift, or live on less. With that in mind, last week I wrote on my whiteboard: “Our fees are what the client is happy to pay.” So, toss out your old “rate cards” and reinvent what you can offer clients, and what they’ll happily pay for it.
