My kids are always accusing me of being cheap. In fact, they claim that the recession has just provided me with a convenient excuse for saying “no” and for cutting back on their expenditures. Maybe… but our research among US consumers has indicated that I am not alone and that we have become a nation of cheapskates. And being cheap has become a badge of honor. Finding a bargain not only makes sense, but it is fun. That’s the reason consumers tell us they like to scour tag sales and downscale antique (junk) emporiums. It’s also why they love retailers like TJ Maxx and Home Goods where they have to sift through the clutter to find the “good stuff.” AT AIM, we call it Treasure Troving and it’s a major trend that is likely to stick around even after the economy recovers. Why? Because Cheap Chic seems to be trickling down from Baby Boomer parents to their Millennial kids (now in their late teens and twenties). And these young people may just carry their thrifty spending patterns, developed during the Great Recession, throughout their lives just as their Depression Era grandparents did. In AIM’s research, the Millennials are telling us about how they scour the web for bargains and then brag about it to their friends, who in turn also visit the same sites seeking deals. The internet has expanded bargain shopping beyond the traditional concept of “sale” to best price/best product all the time.
Interestingly, Cheap Chic and Treasure Troving are not just American trends. Just as the economic downturn affected all economies to a certain extent, so, too, has Cheap Chic permeated even the most brand-conscious and status seeking shoppers abroad. Japan, with half the population of of the US and less land than California, has more than twice as many Burberry, Hermes, and Prada stores as all of America. Luxury labels fuel a $20 billion-a-year market, yet according to an article in Newsweek (citing a McKinsey report), for every one luxury (brand) bag, there are 10 Uniglo, Forever 21 or H&M bags.” The report claims that there are several reasons in addition to the Recession for this shift and that “upscale marketers should not give up on Japan, but they should adjust their expectations: an economic recovery will help sales rebound, but the fact is that some former luxury buyers may have traded down permanently.” (See Newsweek 9/28/09, “Japan’s Cheap Chic”)
We have the same advice for our clients in the luxury goods category of the home market. There will always be a small percentage of the rich who will demand luxury brands and highly priced goods, but the acceptance of Cheap Chic is likely to decrease the overall size of the luxury goods market for at least the next ten years and maybe longer.
At AIM, our clients have asked us to delve into the mind of the Millennial consumer. We have embarked on a major effort over the next 12 months, MILLENIALS At HOME, a combination of both quantitative and qualitative research. If you want to learn more about these consumers, or if you have information you would like to share, please contact us at firstname.lastname@example.org.