Ever since the economy started heading downhill, pundits have been announcing the advent of an era characterized by the “new frugality.” I’ve seen a couple of books heralding this alleged new mindset, as well as white papers from some very reputable consulting firms.
I haven’t bought into this from the start. I have strongly believed that as soon as the economy turns back, so will spending. Will it be the “conspicuous consumption” of the past? Maybe not, but today’s frugality isn’t going to last. Or so I maintain.
Problem is, I haven’t had any data to back up my opinions.
Technically speaking, I still don’t have any solid data to rely on, but there are some anecdotal pieces of evidence to support my contention. The Next Great Generation Blog (how humble) asked participants, “ If you unexpectedly received $100 today, what would you spend it on?
Here are some of the responses (compiled by Carol Phillips on her Millenial Marketing site):
“Rent? Food? My heating bill, so I don’t freeze in cold, snowy Buffalo? Sorry, I’m boring. I’d go spend it on a concert ticket (two, if I’m lucky and buy from the box office to avoid Ticketmaster’s stupid fees!).”
“I haven’t bought shoes in at least a year, so a pair of black Johnston & Murphy Ainsworths.”
“I think I’d buy a sparkly dress and take a handful of over-worked, over-tired, over-caffeinated friends out for an epic adventure in the City of Dreams.”
“Probably booze and cigarettes…”
Maybe it’s me, but concert tickets, Johnston & Murphy shoes, sparkly dresses, and booze and cigarettes don’t sound like the spending habits of a “frugal” consumer.
There a couple of things going against the frugality argument:
First off, there are a lot of market researchers — me being one of them — who will tell you that asking consumers what their future behavior is going to be like is highly unreliable. Most recently, I saw this in research I conducted regarding consumers’ bill pay behavior where the percentage of respondents who said they were likely to change the way they pay their bills in the next two to three years was about 10 times greater than the percentage who said they actually changed their behavior in the past two to three years. We, as consumers, are just not very good at predicting the future — even when it comes to our own behavior.
Second, younger consumers’ perspectives are even more reliable (sorry if I offended you). For many Gen Yers, the recent downturn in the economy is the first one they’ve experienced as working, bill-paying, consuming adults. So they think their newfound frugality is something that will persist because it’s become fashionable to be frugal. But when their car turns 10 years old, and their kids become fashion-conscious teenagers, and…so on…if the economy is healthy and they’re earning money, then they will be spending that money.
I’m putting my stake in the ground now: The so-called new frugality is a crock of