Will Economy Change Buying Habits Permanently?

By Mike Cassidy – Mercury News

Posted: 05/21/2009

 

I took a field trip to Johnny Crowell's home-furnishing consignment empire recently to get a read on the level of pain being inflicted by the continuing economic downturn.

 

I expected to find stories of heartbreak and desperation when I walked into the Home Consignment Center in Mountain View. I thought I'd meet homeowners looking to make the mortgage by parting with family heirlooms and treasured pieces of living-room furniture.

 

The consignment business, after all, is about people bringing in their used furnishings and waiting for them to sell, at which point they split the proceeds with the store. And people today are in the market for proceeds. But what I got at the cavernous showroom of castoffs was a lesson in the subtlety of economic upheaval. Like a butterfly batting its wings in Katmandu and changing air currents in California, every up-and-down tick in the stock market, the unemployment rate and the credit market does make a difference. But sometimes it's hard to divine just where that difference shows up.

 

On my afternoon visit, the Mountain View store wasn't populated by the discouraged and desperate looking to get a few bucks from grandma's antique vase or the ottoman that's graced Dad's den since the Korean War. Instead, I found buyers, not sellers, and a retail operation that was scrambling to keep up with climbing sales.

 

"Our sales are up, which is interesting," says Crowell, who with three partners owns 15 stores in California, Nevada and Texas.

 

In fact, the Mountain View store in March had its best month since moving to its current location 21/2 years ago. And April was no slouch either, Crowell says. Sure, some shoppers had arrived out of something resembling need. You need a dining table, right? And why buy a new one when you can pick up a cheaper, used version?

 

But there was another element in the crowd, explains Linda Hall, the Mountain View store manager, an element for which she makes sure to stock some modest, low-priced items, like small framed prints for $19. "Sometimes people want to buy something just to make themselves feel good,'' Hall says.

 

No, it's not exactly a study by the Council of Economic Advisers, and Hall isn't claiming it is. But the comment got me thinking about the lasting effects of the Big Recession. As the misery drags on, it's become fashionable to debate whether the hard times will be followed by lasting change in our behavior as consumers.

Some say the misery will spawn another Depression generation — we'll be transformed into a crowd that rolls scraps of twine into little balls and never passes a penny on the sidewalk without stooping to pick it up.

 

I'm not convinced. I think the marketing and media machine assembled to sell us everything from a faster way to eat to a better way to watch TV is too powerful for us to resist. We have become consuming beasts. This frugal life — this life of leftovers, last season's fashions and mall-less weekends — feels unnatural and unfair.

When the economy comes back, we'll come right back with it: shopping, spending, consuming. No question our expectations have been downsized for now. We've been reined in by our diminished retirement accounts, stock portfolios, home values and incomes. We are saving more than we've saved in a long time. But as we are building up our bank accounts, we are also building up demand. Demand for stuff.

 

Get this: Consumer spending was up in the first quarter of the year. Yes, the economy is terrible and the future uncertain, but we're adjusting. Financial calamity, it seems, is the new normal, so let's go out and buy something.

 

Crowell, who started opening consignment stores 15 years ago, says he senses an upswing in consumerism. As the economy went into free fall, he explains, fewer and fewer private individuals brought him old items to sell. People were just hanging on to whatever furniture they had rather than replacing it with something new and exciting. An unprecedented share of his inventory was coming from businesses: furniture factories with excess inventory and furniture stores that were going out of business.

 

Now, he says, private parties are calling again, wanting to unload old stuff so they can make way for new stuff they want to buy.

 

"That's some leading indicator,'' Crowell says. "There is something of a market change occurring.''

 

The question now is: Does that mean good times are coming back? Or does the change simply mean that sometimes people want to buy something just to make themselves feel good?

 

Source: http://www.siliconvalley.com/opinion/ci_12420679

 

 

Posted via web from Global Business News