Archive for November, 2009

Where to from here? – The Great Unwind

We are out of recession at last apparently, GDP has stopped slipping and even the network news have stopped heralding the demise of any factory closure or finance company.  I am interested in the idea of discovering what companies thrive in a financial crisis (apart from the insolvency business) and lead that into what works not only for my business but my industry. Looking to the US for clues on business trends is something of a tradition in NZ and so I was pleased to find a very interesting take on a change in consumer behaviour and culture from John Gerzeme, marketing author, director at Young & Rubicam and The In a recent presentation titled ‘The Great Unwind’ Gerzeme claims that consumers have moved from anxiety to action while moving away from the unsustainable consumerism ‘wound up’ by debt. Over the last 20 years they went from a 10% savings rate to negative and debt to income doubled, spending which is leveraged against what should have been spent on childrens education and retirement savings.

Firstly he notes an uptake in the savings rate to a return of about 10% and debit cards have become more popular than credit cards according to Visa. The culture has changed he claims from mindless consumption to mindful consumption, and by restricting their spending consumers can align their spending  with their values and thereby drive business to be about being better rather than being about more. He identifies four value shifts to post-crisis consumerism;
1.     Déclassé consumption is the idea that frivolous consumption is unfashionable. He points to falling demand on luxury brands and high-end real estate and increasing interest in eco-tourism.
2.     Consumers not only require value but values and fair play scrutinizing the cultures of companies and their conduct. Not only has there been a rise in volunteerism but corporates have become involved in numerous community activities outside of their commercial reach.
3.     Durable living suggests that consumers look to extract value out of every purchase. Americans are apparently holding onto their cars for longer, accessing more libraries and education, DIY spending etc. He points to a new phenomenon of gardens and backyard chickens which reflects a change to sustainable thinking and taking care of yourself. He claims companies must align with social responsibilty, promise to helping the customer after the sale or make a statement about their ethics e.g. fair trade coffee.
4. Cooperative consumerism is about connecting to social networks. He claims 72% trust what other people say about a brand or company whereas 15% are convinced from advertising. Buying local provides connection on one level and some companies use networking to help customers to communicate and with common interests (mommy bloggers site called ‘momversations’ on Johnson and Johnson’s website). Some CEO’s (he points to Fords and Zappos) are using Twitter to speak to employees and the market providing values of  transparency and openness.

Values driven spending Gerzeme claims will force capitalism to be better, driving innovation making longer lasting products and better intuitive customer service giving us the opportunity to identify and connect with companies that share the values we share.

Heady stuff eh! So Gerzeme claims that business must align with a change a values driven culture, consumers are unwinding their debt leveraged spending to more sustainable and sensible behaviour. Companies must become socially responsible offer their products which offer value and values to a discerning and motivated public. I think we can identify numerous examples of NZ companies working to these same value shifts, BNZ’s Closed for Good campaign. So in this context the challenges to the real estate/property industry are obviously immense, I look forward to your comments and views as to how we might meet them!

November 01 2009 | Uncategorized | 1 Comment »