Recently I read a news snippet which said that Gillette was experiencing consumer resistance to its five blade razor , the Fusion. Consumers , it seems , were questioning whether five blades were really necessary to get a close shave and balking at the absurdly high cost of replacement blades.
When I read that news item , I thought to myself ” Finally ! Finally people are waking up” !
I remember when the first double bladed razor came out. The first blade was supposed to pull out the individual hairs even as it cut them and then the second blade would lop off the rest thus providing a smooth, smooth shave .The ad seemed to make sense but then we quickly saw the emergence of first, the triple bladed model, then the Quattro and finally the Fusion which had five blades. The rationale was that the more the blades , the closer the shave . This reasoning never made sense to me and I stuck to the same old brand of double bladed razors that I’d always used. Any more than two blades I thought was overkill and besides the more the blades , the greater the chance of their getting ‘clogged’ and,also, the more expensive the replacement blades.As somebody has put it ” Seriously. If you can’t get a close enough shave with 2 or 3 blades, maybe God is telling you to grow a beard.”
I was reminded of this story when I read about” The New Normal” , one of a number of news stories about how ,in the wake of the economic meltdown, Americans are becoming cheap and, increasingly, proud of it. Instead of bragging to friends about their expensive purchases, U.S. consumers are taking pride in being frugal and are no longer self-conscious about saving. “Frugal, savvy , careful”, it seems, is the new normal.
Some of the ways that consumers are saving is by by shifting to store brands, by buying used higher quality items , by couponing , by taking advantage of rewards programs and by stocking up on sales items. Another popular technique is staying away from the mall and simply buying less. An ABCNews poll in April 2010 found that 62% of American consumers are cutting back on items such as vacations , cars and dining out.
Another survey, this one by the Deloitte- Harrison Group says that 80% of Americans surveyed are focused on cutting back. Of that group, 55% say they have done so even though they haven’t been directly affected by the recession. Even more interesting, a sizeable percentage of those who have cut back don’t even feel deprived because they have done so.
According to many observers, this new love of thrift is likely here to stay because there has been “a culture shift in attitudes about thrift,” A recent Gallup Poll showed that 59 percent of Americans now say they enjoy saving money, compared with 48 percent in 2001.People also feel guilty about having ” overbought” in the past and are determined to save more in the future.
Naturally, such a drastic change in spending habits is not without its consequences. Yesterday’s Tech Ticker had two financial experts commenting that consumers have lost confidence in the economy and that the new frugality is delaying our recovery from the recession.If people are not buying , it impacts sales and consequently jobs.I’m sure all of us know the truth of this ,having seen a neighborhood mall close down and stores go out of business.
There’s no doubt that , short term , there will be some negative aspects to the New Normal but, if one takes the long term view , is it all that bad ?
The main source of growth of our economy has been consumerism. People have been encouraged to spend, spend, spend because such buying would result in more jobs and a healthy economy. For as long as I can remember, economists and financial experts have been extolling this model in which people buy , very often on credit , even as their savings dipped to an all time low. This used to surprise me because many of these experts were simaltaneously calling for fiscal prudence on the part of the government. The results of such unrestrained spending on the part of the U.S consumer are ,sadly, only too apparent. A recent article on the Yahoo Tech Ticker , on the demise of the middle class, offers some convincing numbers that illustrate the dire economic straits that many Americans find themselves in. Here are some of the statistics from that article :
• 61 percent of Americans “always or usually” live paycheck to paycheck, up from 49 percent in 2008 and 43 percent in 2007.
• 36 percent of Americans say that they don’t contribute anything to retirement savings.
• A staggering 43 percent of Americans have less than $10,000 saved up for retirement.
• 24 percent of American workers say that they have postponed their planned retirement age in the past year.
• Over 1.4 million Americans filed for personal bankruptcy in 2009, which represented a 32 percent increase over 2008.
• As of 2007, the bottom 80 percent of American households held about 7% of the liquid financial assets.
• The bottom 50 percent of income earners in the United States now collectively own less than 1 percent of the nation’s wealth.
Granted that there are many reasons for these depressing statistics. The flight of jobs overseas, the loss of manufacturing jobs, mechanization and robotics and globalization are some of them. However, our unchecked spending habits also have something to do with our plight. How could they not ?
I’m reminded of the old joke about the two merchants who made a living by selling things to one another. Eventually,as was bound to happen, they both went broke. Similarly, an economy that is driven by consumer spending , must also eventually run into trouble.
Some see this cutback in spending, the New Age of Thrift, as a diminution of The American Dream. But is it really ?
James Truslow Adams first coined the term in his1931 book The Epic of America , stating “The American Dream is “that dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement….. . It is not a dream of motor cars and high wages merely, but a dream of social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position.” Over the years , the meaning of the term has gradually changed . If one were to ask the man in the street to define the term, he would almost certainly respond that it means the right to own a house , a late model auto and sundry other material goods. It is our unthinking materialism that has brought us to this pass. Perhaps the scaling back of our material desires will lead to a life that will be ultimately be more meaningful, more satisfying, more fufilling as we pursue the true American Dream.