Almost overnight, people stopped spending the way we’d come to know. For the past 30 years, as the U.S. economy was generally growing, so did our appetite for buying everything in sight! But late last summer there was an abrupt reversal. Since then, even the “wealthy” have cut back on their buying. According to an article by Jenni Russell in The Guardian, many people are intentionally simplifying their lives. Among the reasons cited is the obvious financial crisis that has people frightened. When people are afraid, they hold on to what they’ve got and spend a lot less.
Harvard Business School professor John Quelch, writing in The Economist and also on his blog, has nicknamed these new consumers the “Simplifiers.” He notes that in this current atmosphere, luxury seems to be a dirty word. That’s why, for example, sales at Neiman Marcus dropped 30 percent while Wal-Mart’s rose. Sales of yachts and diamonds are down and showing up at a party in Manhattan wearing jewels, furs, and a $10,000 party dress is suddenly considered bad taste. Interestingly, America hasn’t seen such a complete reversal of attitudes since the Roaring Twenties gave way to the Great Depression. Then, as now, conspicuous consumption was met with disgust, Quelch contends.
That said, however, a recent study by the market research firm Harrison Group and American Express Publishing provides some significant clues on how we might approach selling boats these days. They surveyed people whose discretionary household income exceeds $100,000. They concluded the shift appears to be only in people’s attitudes toward luxury, not in their ability to afford it. A solid 83 percent said they are still in good economic shape, despite the recession. But the percentage of those who say “a few luxuries are important to have, even in tough times,” dropped from 61 percent in June 2008 to 50 percent by October.
At least in the short term, then, we should consider changing our marketing to reflect the “Simplifier” paradigm. For example, we must emphasize the concept that a boat is not a luxury item at all, but an affordable addition to the quality of family life — something we’re doing with the Discover Boating campaign. But dealers need to bring it home!
This paradigm will favor utility and affordability over convenience, according to the editors of Trend Magazine. In this economic climate, consumers will be giving up over consumption, but will demand more meaning and fulfillment in their lives. Most importantly, consumers will not let themselves be defined by what they have, but rather by what they do and who they are, predicts Trends. Such a trend is favorable to boating.
Finally, a longer view indicates we can expect the move from over consumption to shift again. If history is any indicator, spending on items like boats will pick up the pace as soon as the economy rebounds. While this recession seems unprecedented in many ways, past recessions have been marked by consumers pulling back from over-consumption only to spend wildly again as soon as the economy recovered.
So, it is logical to anticipate that when consumers’ fears have disappeared, they will act on their desire for boats. What likely will carry over will be the increased buyer focus on quality and value.