“Mindless excess is over.”

So says Faith Popcorn, chief executive officer of marketing firm BrainReserve, when asked whether women will go back to their ferocious shopping habits once the economy fully recovers. “The entire consumer mentality has changed across the socioeconomic spectrum,” said Popcorn. “We understand and buy what we truly need, and we actually want less — stuff is clutter and we want simpler. We call it cashing out.”

This story first appeared in the August 16, 2010 issue of WWD. Subscribe Today.


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So is this the dawn of a New Consumer Age, as many experts contend, one that will force brands and retailers to make tectonic changes in the way they do business and transform the nature of shopping in America? Or is the consumer simply the same — just slightly different due to economic pressures?

It’s a debate obsessing companies at all price levels and industries — from fashion to food to cars. Regardless of which side of the argument one falls on, it’s clear the shopping rules have changed and key trends include:

• The boom in e-commerce, making it easier for consumers to buy from home — and to comparison shop.

• Technology is now more fashionable than fashion — in other words, teens and twentysomethings would rather buy an iPad than a handbag.

• Social networks are driving real consumption, with friends telling friends about hot products or brands — meaning brands have to enter the conversation.

• The Great Recession has forced everyone, even the rich, to alter their shopping behavior and buy less.

• High levels of personal and household debt continue to constrict the Baby Boomers, who are looking for simplicity and value.

“Women are somewhat more hesitant to loosen their purse strings — especially for nonessential items and major expenses that can wait,” according to “A New World Order of Consumption,” a Boston Consulting Group study. “Across all regions, they are more likely to seek out sales promotions, spend time shopping around for the best prices, and shop in discount stores.”

The study noted consumers’ values and priorities are shifting. “Home and stability have taken on greater importance, while overt luxury and status have faded. The great hunt to find the best value at the lowest price remains firmly top of mind almost everywhere, particularly in Europe and the United States, where consumers enjoy the feeling of what they view as smarter shopping.”

Among the groups it sees as more likely to spend are young singles, dual-income couples with no children and empty nesters.

According to a Booz & Co. survey, consumers are relying more heavily on coupons, seeking out the best deals, waiting for sales, saving their money, buying more private label and doing more research online before heading to the store.

On a conference call Thursday with investors, Kevin Mansell, chief executive officer of Kohl’s Corp., described his customers’ behavior right now: “We see one that’s reluctant to spend. We see one that’s focused on the long-term value of what she buys.”

Andy Murray, global ceo of Saatchi & Saatchi X, a shopper marketing division of Saatchi & Saatchi, observed, “We do believe [consumer shopping habits] have changed. The question, of course, is will it change back? The change is in technology. In terms of e-commerce, there’s a lot more granularity and research. Technology pushed her over the transom, where she’s not coming back. The way she approaches shopping is fundamentally changed. It’s driven by the economy, but aided by technology.”

Tim Calkins, clinical professor of marketing at the Kellogg School of Management at Northwestern University, believes the consumer has new priorities. “I think the economic mood has clearly shifted. Consumers are acting differently than they did several years ago. There’s a different mind-set. They’re cautious about their purchases and more thoughtful about what they buy. Debt levels are coming down. The question everybody is asking is, ‘Will that continue as things improve, or will we return to the previous spending levels?’ We really don’t know,” said Calkins.

“Consumer spending is clearly tied to the economy,” he continued. He said even though debt levels are declining, absolute debt levels remain very high. “Credit card debt is still very high. Data say people are saving more and spending less. My sense is we’ll see a hesitant consumer for the next several years.” An indicator of that could be the savings rate, which jumped to 6.4 percent of income last month — its highest level in more than a year.


Calkins explained that people now don’t say, “I don’t want a Louis Vuitton handbag. Now people say, ‘I really can’t have a Louis Vuitton handbag.’ My impression is the consumer wants haven’t changed, but there’s a greater understanding of the limitations.”

Furthermore, Calkins sees a greater divide among the economic classes.

He noted that people who are very affluent will still buy luxury brands, but there will be a greater divide among those who can afford them and those who can’t. He also feels luxury brands will have to decide if they want to trade down to reach more consumers. “Do they remain a true luxury brand even if they have to become smaller, or do they chase the consumer down and risk tarnishing their brand? The savviest brands will remain true to their position. But for those who have to hit their short-term numbers, it will be hard to remain a pure luxury play.”

Even luxury brands are having to adapt to the new landscape, however, beefing up their Web sites with e-commerce functionality and social networks. Experts believe the increased use of the Internet is propelling the evolution of the consumer as much as the recession.

“It’s a huge shift, particularly among the younger generations,” said Marc Gobé, founder of Emotional Branding. “That consumer has a completely different way of shopping that’s driven by technology.”

Gobé explained that what used to be loyalty to a particular department or specialty store “is being replaced by the loyalty you have to your friends. There’s no brand loyalty. They [brands] have to create communities. They have to make sure they’re not talking about themselves but that others are talking about them. It’s a 360-degree shift.”

Gobé acknowledged that a percentage of consumers are more conscious of what they’re buying and can’t afford it as much as they used to and are concerned about the environment, but another group of young women love to shop as much as they can. “It’s fun, interesting and socially rewarding,” he said.

He said lots of stores get it, such as Uniqlo and H&M. “They’re packed. They’re so dynamic and spirited. It’s like a party. They’re all buying and they’re sharing the information online with their buddies,” he said.

Gobé also noted there’s a need for more public events to create a conversation. “The biggest thing in brands today is: Unless the brand is shared, the brand is dead. If she doesn’t share it on Facebook and YouTube, nothing will happen,” said Gobé.

Gobé also believes that young people are forgoing apparel and accessories for the latest technology.

“Do I buy an app for my iPhone or do I buy a new pair of shoes? A lot of young women are buying apps before they buy the shoes. There are a lot more offerings outside of fashion and beauty that provide the excitement that fashion and beauty used to provide,” said Gobé. Recent Commerce Department data showed that spending on technology products jumped 1.8 percent in the first half, while spending in almost every other product category declined.

Amy Avitabile, senior vice president of marketing at Lord & Taylor, called the use of social networking a “complete game-changer.” Lord & Taylor is using Facebook and Twitter in nonpromotional ways. It also has a mobile strategy for messaging. While Lord & Taylor was late to the party with e-commerce (its site is less than two years old) “it’s the number-one trending door by a lot,” she said.

She believes there’s a certain customer who’s going to be brand loyal to a store, and those who won’t be. “It’s up to the retailer to provide the differentiation,” she said. Lord & Taylor’s new advertising campaign, for example, was created to reflect a greater sensitivity to the consumer.

“Our big message was to alleviate the guilt of shopping,” said Avitabile. “We don’t sell things she needs, but what she wants.” So the store developed the “Shop Smart” campaign, created by David Lipman with the tag line “Shop More, Guilt Less.”

“The new customer is smarter and a bit more savvy than she’s been in the past,” said Avitabile. “When we hit the reset button in October 2008, her appetite did change. We saw it in everybody’s comps. She’s price-conscious. What we’ve found is our customer is very much focused on value. For our customer, value is about getting great-quality fashion merchandise at a fair price.”

Intermix, the 24-unit contemporary chain, has also seen the customer evolve with the times. “I think they’re more savvy, more discerning and spending more cautiously,” said Khajak Keledjian, ceo. “They’re buying things they absolutely love — pieces with longevity that are more timeless and have good quality. They’re not buying as excessively as they used to shop.

“I think it’s the aftermath of having an excess of everything and the bubble,” he continued. “I like it this way better. It’s less confusing when there isn’t an excess of everything. You didn’t know the true reality.”

Yet Stefani Greenfield, founder and owner of My Next Act, pointed out consumers will never get tired of desiring attractive things. “The opportunities to spend and ways to spend are different. People don’t want the clutter and the stuff.” Greenfield said there’s necessity and desire, and whether or not you can spend, you never lose the desire. “You can buy a few investment pieces that have longevity,” she said. “So much product is polluting the market. We’ve overassorted. Stores are overassorted. We want to be more streamlined.”

She said there’s an opportunity to get true aspirational products at different price points. “They’re not going to max out 10 credit cards and put their house into foreclosure to get them. But the day that we don’t want to admire beautiful things is the day I don’t understand women,” said Greenfield, who has a show on HSN called “Curations.”

Greenfield added women are now proud to say they got a necklace at Topshop, for example. “People’s security at mixing price points is much stronger.”

Women are now not only willing but eager to mix designer products with styles from J. Crew, Uniqlo, H&M and Zara.

“Now you can buy groovy, stylish clothing at all price points,” said Simon Doonan, creative director of Barneys New York. “That was never the case in the past. Now there are so many different price points and levels. At Target and H&M, you can still find merchandise at a high-fashion design quotient. Obviously the economy has put a damper on it. But we have tremendous loyalty with people saying ‘I’m a Barneys person.’ The self-definition of being a Barneys girl is very strong.”

Yet while he believes shopping is a leisure activity that remains central to the culture, and consumers remain loyal to particular retailers, Doonan admits, “They [consumers] are interested in the backstory. The consumer knows who Alber Elbaz is. They know who the Rodarte girls are. It’s no longer a fashion-insider thing. They’re knowledgeable and very savvy. They think of themselves as an extension of the place they’re shopping at. It takes on a new level. It’s a different emotional commitment.”

Which is partially what is fuzzing the debate over whether there is a new consumer at all. Shoppers are emotionally connected to brands more than ever, so how then can they have changed?

“I don’t think there is a new consumer,” said Craig Leavitt, ceo of Kate Spade. “Some of the habits are a bit exaggerated now. She’s more careful and probably spending a little less. But as long as you continue to excite the customer, she’s still happy to buy. She was more open before, but it’s a requirement now to get her excited about what she’s buying.”

Richard Dickson, ceo of branded businesses at Jones Apparel Group, also doesn’t think there’s a new consumer, but simply one who has more choices as to how and where they shop. “The landscape of choice has changed the dynamic of when they shop. It’s gone way beyond e-commerce. They’re into mobile marketing, where you can literally see a product where you are, order it and it’s delivered to your home.

“The name of the game is change,” he continued. “We’re all in this new territory together. The pressure is on all of us, especially the brands that are millennial driven.”

William McComb, ceo of Liz Claiborne Inc., pointed out there are pockets of consumers who haven’t changed a lot, and groups who have changed. He described two different customer types the firm targets with its various lines: The young woman who has her own apartment, pays rent and doesn’t have a mortgage and has a lot of discretionary income for fashion and beauty categories. “She’s gotten choosier and a little promotional-oriented, but there hasn’t been a fundamental sea change in where she’s spending her money,” he said.

The other customer is the mother of two children in a dual-income household, with job anxiety and worries over employment. “She’s saving more and cautious. While she hasn’t changed her fantasies, hopes and desires, nor adopted a depression mind-set, she’s very brand-conscious and hunting for deals more.” She might not be going to the mall as much, her five major apparel purchases a year may have gone down to two and she may have switched from Target to Wal-Mart, “but she still wants to look and feel her best.” She isn’t shopping as much and is doing it in a more disciplined way.

“We haven’t had the effect of World War II, where it’s knocked out everybody’s hierarchy of needs,” said McComb. “That hasn’t happened. People are spending, and the underlying psyche of spending hasn’t changed.”

At least not yet, perhaps — but if the economy continues to limp along for years to come, a shift is bound to take place. Popcorn, for one, predicts the changes that already have occurred will be long-lasting. “Consumer confidence took another hit in July; a reflection of job-market worries and the global economic climate. I do think it’s more fundamental.”

She said the consumer is more value- than just price-conscious.

“That’s the way she makes her assessment of brands — and she’s happy to give them up, as evidenced by 60 percent trading off a name brand to a store brand, with 9 in 10 satisfied with the performance of the store variety. Technology is the enabler — it allows her to make her assessment of the brand’s total value in comparison to alternatives and to solicit the counsel of her peers in selection. And technology gives the consumer a megaphone to support brands that support her, while protesting against those who don’t,” said Popcorn.

She walked up Madison Avenue recently, and the stores were empty, reinforcing her view that the economy won’t be returning to its previous levels anytime soon. “It’s not going to happen. Not ever. It’s permanent and we’re getting used to it and it scares the hell out of us.”

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