Have we changed for good?

There’s been a lot of talk in the media, in both news reports and opinion pieces, about people in the western world changing their consumption habits in response to the huge upheaval in the global economy.

The perceived recession (Australia has managed to scrape by with tiny growth in the last quarter, so is not technically in recession; however, nearly every country in the world has experienced a drop in production and imports) has led to a questioning of the values behind the credit cycle. Borrow, consume, borrow, consume, borrow... Our values have been shaken as people find themselves with unmanageable debt, a lower income and ravaged superannuation. Australians are feverishly paying off their credit card debt and supposedly questioning whether a new pair of shoes or a shiny watch will bring them fulfilment, or if such purchases will simply bring yet more debt and another reason to fret about job security.

Sales of cheap wine have spiked, demand for pricey organic foods has slowed, and expensive brand names are faltering in favour of home brand products. “Three quarters of shoppers who have made changes to their food and grocery shopping due to the economic climate say that they will stick with their new habits even when the economy recovers, according to new research from the UK,” says an article in Australian Food News.

But is this true for Australians? Have we changed for good? Or is this ‘new wave’ of consumption just hype created by media outlets wanting to reassure consumers that there are good intentions behind our drop in borrowing? Or is our ‘tightening of the purse strings’ a temporary reaction from a panicked public overcome with sudden remorse for past reckless spending? Let’s look at the reasons for the perceived change in habits.

The financial arguments for our change in spending habits:

• Lost wealth. Job losses, lower dividends, losses to superannuation, and lower interest on savings due to a drop in interest rates all equate to less spending power.

• Nervousness about the economy. Anticipating job losses and further share market falls lead to a desire to increase financial security via savings. This leads to lower spending as people save for the ever-more-likely rainy day.

The emotional and moral arguments for our change in spending:

• Economic uncertainty leads to a desire for security for most people, and the most comforting refuge lies in the home. As consumers rediscover inexpensive domestic comforts, they wonder whether the gathering of material wealth actually leads to happiness.

• In light of mass redundancies, conspicuous consumption looks unseemly. Excess goes out of fashion and reducing, reusing and recycling comes back into fashion.

However, conflicting reports on the behaviour of Australian consumers keep surfacing. Retail spending goes up, retail spending goes down. House prices collapse, house prices inflate. “The grocery purchase behaviour of Australians has not been confined to the pursuit of lower prices despite a general belief that the country is in the midst of a recession,” says Australian Food News, noting the findings of a study by market research firm Datamonitor. “Australians are reluctant to initiate wholesale changes to their grocery product consumption preferences but minor alterations – including greater demand for private label goods – are being made.”

So are we all style and no substance? Has borrowing slowed merely because the banks are warier of lending, or have we actually changed our ways? It seems to me that we have made temporary, minor changes to our spending habits, which we profess to intend to keep (“Consumers report a desire to continue to employ the same buying tactics they are using now beyond the recession, although they have indicated a likelihood to spend more on dining out when confidence returns,” reports Australian Food News), but a wholesale shift in the way we idolise shopping and consumption has merely been put on hold, to re-surface once the economic crisis is just a memory.

Emotions fade; morals are intangible; attitudes constantly shift. Finance, however, is measurable. Once the cash is back, Depression-style insecurities will be replaced by a desire to acquire material goods and reassert spending power.

I might be wrong. Certainly, things seem to be turning around in the US, where reporters are writing of the death of malls and the growth of cottage or local industry and online shopping. This in itself is a cultural shift, as shopping malls, particularly in the US, are places for social gathering and entertainment, with shopping seen as a pastime rather than a necessity.

What do you think? Is shopping a pastime that you have temporarily sacrificed until finances stabilise, or do you think a cultural change against ‘shopping for shopping’s sake’ is under way?

Personally, I am a classic case of ‘I’m saving money but not really’. I’m shopping at the same stores but looking at the half price rack. To put that into perspective, though, I belong to a generation that is the most attached to ‘necessities’ like mobile phones, high-speed internet and pretty shoes; perhaps I’m just in denial.

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