A few weeks ago, I heard an interesting statistic: 48 million credit cards were closed in 2010. (NPR) Now, that made me go “Hmmm…” I’m guessing that some of those people were forced to close their cards, but many, I bet, chose to do it as well. With about 70% of the U.S. economy based on consumer spending, these stats can lead to pretty big consequences. So even though the recession “officially ended” in 2009, its effects are still very much alive with both the employed and unemployed. How does this affect behavior and how can we apply this learning to brand innovation as well as our approach to established brands?
In the US, the days of bling are over. To put it more succinctly, sane consumption has replaced conspicuous consumption. This doesn’t necessarily mean that people aren’t spending, because they are. The luxury sector, for example, is booming once again. (Remember, luxury got hit first and hard during the recession.) Now that this sector is improving, fingers crossed, the rest of the economy is not far behind. The top 20% of earners account for 60% of spending so this is very good economic news, indeed. (Moody’s)
In a recent New York Times article, one consumer confessed that since the onset of the recession, she avoids purchasing conspicuous items: “Over all, you want to wear less branded items.” In the luxury sector, it is more on-trend to purchase timeless items with staying power through multiple seasons (think Louboutin pumps) than a pair of sunglasses that scream Gucci across their sides.
But what does this mean for the other 80% of earners? Interestingly enough, according to the U.S. Commerce Department, the average US savings rate has increased from 1% to 6.4% in 2010. More people are choosing to save and not spend, adding to their own feeling of safety and security while reducing spending by 2/10 of a percent, and thereby increasing economic woes. Fear is an influential driver and hard to control.
We all need something to believe in and this is a calling that brands can satisfy. Brands have the power to inspire and aspire; they make us feel part of something larger than ourselves. They can also make us feel healthy, cool or even smart. Those who are out there with a brand to guide through these crazy economic times, ask yourself this: How can my brand turn that frown upside down and dissuade America’s fears? I bet that the brands that have the power to tap into America’s natural sense of optimism will serve as welcome distractions from scary realities like debt ceilings and loan defaults. Coke has understood this for years. Check out what they have done with their Open Happiness campaign – awesome!
The Coca Cola Friendship Machine
Any other brands out there speaking ‘happy?’