Philly.com, October 28, 2008
A spending wake-up call
By Stacey Burling and Carolyn Davis
Try walking through King of Prussia mall with a tightwad's mind-set - what other mind-set is there these days? - and you can quickly see yet another reason the economy is on shaky ground.
The sprawling mall complex is a temple to America's consumer culture - a gleaming, seductive repository of brand-name dreams that prospered through a long, indulgent, credit-fueled buying spree.
Now that the party's over, you may look with a more jaded eye upon Nordstrom's $1,195 high-heeled Jimmy Choo boots, the $455 Badgley Mischka bag at Lord & Taylor, Free People's $128 ruffled skirt (about 16 inches long), the $12 dish soap (17.5 ounces) at Restoration Hardware.
Might the staggering economy, plunging market, falling home prices, and uncertain gasoline prices inspire a collective revelation that shatters the foundations of bling, fabulousness, and the consuming life as we've known it? As in: Wait a minute. We don't need this stuff.
Could frugality become cool?
This is a frightening prospect in an economy that counts on consumers for two-thirds of spending, but some cultural observers see it as the silver lining in our monetary dark cloud.
"What are the opportunities here? I think there's a chance to rethink a lot of assumptions and habits and values and behaviors," said Jim Wallis, president of Sojourners, a religious social-justice organization.
As the country considers more regulation for its financial sector, he said, "we also may need new self-regulation."
Tara Weiner, managing partner for the greater Philadelphia region for Deloitte, said she thought people liked the sound of conservation better than frugality. Whatever you call it, she said she thought it was the new wave, a "structural shift" in attitudes that dovetails with the green movement and suits a world where economic pain is cutting across the demographic spectrum.
Kit Yarrow, a psychologist at San Francisco's Golden Gate University, who studies consumer behavior, said she thought many people were ready to live a simpler life. They have felt bad enough about their profligate spending that pulling back will feel liberating.
She, and others who study consumer culture, said some people might be happy to dial back the birthday party wars, rethink the prom limo, buy just one nice handbag, and reconsider what it means to be middle class.
"I think it's going to be cool to be thrifty," Yarrow said. "I think a lot of people have felt like the level of consumption they've had in the last 10 years felt like gluttony."
Even people who still have money will likely cut back, she said, out of respect for those who do not. "It will feel bad to be ostentatious - except to the most callous out there."
More cynical observers say it is too early to forecast a nation that will cast aside its Sex-and-the-City buying fantasies forever - or even for a generation - and fall instead for a show about a group of hardworking girlfriends who shop at used-clothing stores, make their own pizza, and go to the library.
After all, the effect of 9/11 on behavior was far less than many pundits predicted.
"I don't know if I see the resurgence of a Protestant work ethic. I doubt it," said Waheed Hussain, who teaches legal studies and business ethics at the Wharton School. He thinks people are more likely to buy smaller iPods and SUVs than to forgo that cachet entirely. "It would take a lot more than what we've seen so far to create that."
Stephen Hoch, a Wharton retailing expert, thinks people are chastened and will change their ways. For a while.
"I do think it's a wake-up call for right this minute," he said. "People recognize they were out of control. Given the same opportunities, it's not clear to me they wouldn't do it again."
On a recent work night, King of Prussia mall still had shoppers, the usual bored-looking men and purposeful women. Some carried bags from high-end stores. Others were shopping for their children.
Two girlfriends from the Scranton area piled bags on a table as they took a break. They had already dropped some purchases at the car and planned to buy more on their way out. One works for a car dealership that has recently said it would lay some workers off. She did not want her name used because of her employer's financial condition. Her friend works for Wal-Mart, where things are hopping.
"I'm not worried about my job," she said. "If anything, everybody should be trying to get a job at Wal-Mart."
Almost all of their spending was for their preschoolers. They had gone to the Disney Store and KBtoys and found other good sales. "A lot of things we bought that we didn't need, we paid ridiculously low prices for," said the Wal-Mart worker.
In Philadelphia that day, Kevin Tilsner, who drives for Papa John's pizza at night, played in a park with his 4-year-old son, Max, while waiting for his wife to finish work at a bank. They do not go out to dinner or the movies much now and have taken in boarders for extra income since Max was born. They are trying to instill a "nonconsumeristic" attitude in their son.
Tilsner said this would be a lean Christmas for his family. He said Max "doesn't need all the plastic nonsense" that goes with Christmas. "The love I can provide him is better than a Hess truck."
Lisa Wise is executive director of the Center for a New American Dream, a nonprofit organization that encourages people to cut back, partly for environmental reasons. Parents, she said, now have a "really good set of reasons to talk to their kids about the difference between needs and wants and scaling back. Now's a really great teaching moment."
Buying experts said that people with lower incomes had been "trading down" for a couple of years now and that it was spreading to upper incomes.
Michael Silverstein, a senior partner at Boston Consulting Group, said many people were scrimping, sometimes so they can splurge more selectively. "Macaroni and cheese is having one of its best years ever," he said.
But women, who make most buying decisions, still want a nicer house, a bigger kitchen, a vacation with the family, and that won't go away, he said.
Once the economy stabilizes, he said he thought they would start buying again. Today's hard times will be a "largely forgotten" little scar.
The country could make the new behaviors last longer by creating tax incentives for savers, said Karl S. Okamoto, who directs Drexel University's business and entrepreneurship law program.
He said he did not believe that people were naturally reckless spenders. It is "human nature to gather nuts," he said, but society influences what the nuts are. "Why isn't knowledge for its own sake a nut? Why isn't time with people you are fond of a nut? That it has to be something you put in a shiny blue box is a cultural value."
He doubts that the forces in favor of frugality will win. "Who's going to provide that anchor that resists billions of dollars of advertising and a cultural assumption that the market is the place to make decisions?" he asked.
Yarrow, who studies generational differences in buying, said he thought baby boomers, many of whom grew up in leaner times, would find it relatively easy to adjust. But "it's going to be extremely painful" for younger people.
Neil Howe, a historian who also studies generations, has high hopes for millennials, those born between 1982 and 2002. Yes, they have had it pretty easy, he said, but they are confident, work well together, and care about community. He said he thought they were most like what he called the G.I. Generation, the relatively sheltered group that came of age as the Depression hit. They rebuilt the country.
He said he thought younger people could handle living with less. "Remember that when you break apart the old order," he said, "you create huge opportunities for the young."