Productivity: A Darwinian Gale
What the great recession has wrought is not what is popularly supposed. One common view, perhaps the most widely proclaimed, is that the recessionary experience of frugality has ushered in an enduring era of penny-pinching and thrift that will wholly define the character and mindset of the recovery consumer marketplace to come. The consumer, it is said, has been changed altogether.
At the other extreme is an alternative view that consumers are hardy spenders, acquisitive at heart and materialistic above all else, who will pick up right where they left off the minute this recession bottoms out. By this view, consumers have not been changed at all by this recession, only put into a holding pattern.
Neither view is correct.
Clearly, this recession has transformed the ways consumers shop and buy. Yet, what's behind this is not a change of heart but a change of circumstances. Consumers do what circumstances allow, so the way to anticipate what consumers will do in the recovery consumer marketplace is to scrutinize the context within which consumers will engage that marketplace. In the context of the recovery consumer marketplace to come, consumers will be entirely different, not the same as before, but they won't be utterly frugal.
The context of consumption at hand is one that reflects a loss of certainty about risk in the macro-economy; more specifically, a loss of the conviction, pervasive throughout the consumer economy over the last three decades, that economic risk had been tamed. It has been a generation since planning for and protecting against economic risk hung over the consumer marketplace. This recession has brought it back.
The rival hypotheses of frugality versus carrying on as before reflect little more than epiphenomena better understood in a broader context. The defining dynamic of the recovery consumer marketplace will be an overhang of uncertainty about economic risk. Lots of things are going on in the media space right now, but this is the most important thing related to consumers.
This recession has lowered the curtain on the heady consumption and liberal media consumption that energized the economy for three decades. Looking ahead, economists foresee an economy in recovery that will be much smaller in size and growth than the peak of the boom just passed.
Certainly, consumers are using media differently nowadays. More fundamentally, though, consumers are approaching marketing differently, and media matters only to the extent that marketing matters.
The good news is that a smaller economy does not mean that the consumer imagination will be bereft of ambition or wholly appropriated by a resignation to do without. As discussed in The Futures Company white paper available at darwiniangale.com, even with smaller household budgets, the capacity for dreaming will be as big as ever. Consumers are not going to give up on their aspirations to a better life; they will just rechannel these ambitions to fit the context of the recovery consumer marketplace. So for media to matter, marketers will first have to reconfigure how they connect with consumers.
In their quickening immersion in uncertainty, consumers are rethinking what motivates them. The surprise and severity of this recession has unveiled a world in which less was known than was thought, so circumstances are forcing consumers to find new ways to invest their lives with assurance and promise. In particular, consumers are rethinking the definition of value.
Indulging economic risk meant not having to worry about consequences. That's what indulgence is, and that's exactly what consumers did during the prior period of indulgence. So, conversely - indeed, inherently - taking economic risk into account in the future will mean that consequences will be a bigger part of the consumer decision calculus. Even if consumers don't make different choices, the process and motivations for arriving at those choices will be different.
This focus on consequences will be the hallmark of the recovery consumer marketplace to come. The consumer psychology on the rise is one of networks and prioritization, of explicitly pricing in consequences and externalities, and of giving more than lip service to being responsible, resourceful and vigilant about downside risks. This is the consumer zeitgeist now aborning.