Here, summer holidays are over, and again autumn is a season that does not seem to be active. Last time I wrote about the problems of retailers, although it was possible to say more on this issue. Now let's think about consumers. Where are they located? Who are they? And will they show themselves this year?
There are many confirmations that the people we are so used to in the era of consumerism have turned or are turning into other people who have other values, and they look with an unbiased look at how money is earned and how to spend it.
Maybe it's best to start describing this transformation in the mindset of people, simply listing what we are seeing.
The principle of "being no worse than people" is a thing of the past. There is no longer any way to make purchases for the sake of shopping itself and to demonstrate what a person has, although personal satisfaction remains. Therefore, this means that what you own means less than what you have already done and where you visited (I exclude the super-rich who are still buying yachts the size of 100 feet).
In turn, for many wealthy families, this means that the craving to experience everything from personal experience is preserved, and how. Cruise ships are getting bigger (uf!). People continue to raft all around the Amazon, conquer the heights of Kilimanjaro and hiking around the Appalachian trail.
The free style of clothes is now universal. Gourmet restaurants are currently experiencing difficulties in order to encourage men to come in jackets, not to mention neckties. Strict suits are now worn for weddings and premieres at the Metropolitan Opera. And for weddings, I would add, on which diamonds still play a big role.
The everyday form of clothing requires inexpensive and essentially one-time or at least transformable jewelry. Rings and earrings can hang on the neck chain. And necklaces can be worn as bracelets. A woman can use them when she is in the day on heels, in leotards and in a T-shirt. The recent growth in the business of costume jewelery and the reduction in costs for the average purchase of jewelry confirms this.
This, naturally, causes lower average prices for retailers. Even with higher profits from inexpensive products, it is ever more difficult to work without breakthrough than ever before.
Only about 60% of working-age Americans currently have a job, and many of them either work part-time or many people have an hourly rate that is much lower than before. In addition, average salaries have actually declined in the past five years, if adjusted for inflation, after it has been unchanged for almost 30 years. And, of course, among the working people many had to switch to less paid jobs.
For decades, there has been a steady decline in the middle class (due to which, in fact, there is actually a jewelry industry). People either have succeeded, or their standard of living has significantly decreased, which is happening more often. These people are not buyers who freely spend money to buy luxury goods. The minimum salary of $ 15 per hour is a good idea and long overdue, but such a salary means that people can survive, but not squander.
This change is not necessarily the result of greed or incredibly high management salaries, despite the fact that it has become a political issue. This is the result of the rapid development of technology, which is why the workplaces are constantly shrinking and the need for people is reduced. Companies are constantly looking for ways to reduce "numbers". Robotics is what will give the United States the ability to remain a society with high-tech production and low labor demand - high-tech start-ups hire a handful of people compared to factories that have assembly lines. It should be expected that this problem will only increase.
As for those people who have a job, many of them got a bitter lesson, going through the Great Depression, which still carries a threat from everywhere. They saw, how families collapsed because of job loss, or they themselves experienced unemployment. The financial and legal industries are two examples where people received large salaries in the past, and then faced a sharp drop in employment. In both cases, technology and outsourcing played a role. What better evidence of a fundamental restructuring of labor and productivity than the Federal Reserve's unwillingness to raise interest rates, despite years of economic stimulus?
Anyway, those who still get good salaries now consider it top priority to have money in banks and avoid the appearance of debts. Next on the list are jewelry or a country house, where you can spend the weekend. An excellent study by MasterCard, which has an excellent opportunity to know how people spend money, has shown that the nature of current costs has radically changed, even if banks continue to believe that consumers are still buying the way they bought before.
As an example, this study showed that the number of credit cards that a consumer or family members carry with them has declined from the beginning of the recession from seven to four. These four usually include a permanent customer card (for example, from a department store), a discount card or a savings card and a card for cash transactions. Consumer indebtedness has declined significantly, as people cut their share of borrowed funds and now use cards to extend the payment period for short periods. MasterCard calls these customers "transaction participants" (Transactors), who more often manage their own cash flows than become long-term borrowers. There are much fewer long-term cards with a depleted loan at a high interest rate. It is in this way that banks actually made money in the past. Credit cards will undergo big changes, and there will be more competition.
People think first to save, and then spend. Therefore, if jewelry jewelry was sold for $ 5,000 a few years ago, now they are sold for $ 2,000. It would be unreasonable to think that these changes in the mindset of consumers will be reversed and everything will return to what once was.
The people of the generation of the two thousandth (and the now emerging Z generation!) Are the buyers of the future, and they already have a huge impact on our economy. But they bear the burden, which practically was not in the years of the post-war generation - the debt for education. Now it is over $ 1 trillion. The people of the two thousandth generation learn that you can constantly manage the payment of interest, but the payment of the principal amount is really a serious matter. And even if most of the debt is paid, everyone, including friends and family members, sees how the burden of debt is crushing.
Finally, we must add that the cost of materials necessary for the manufacture of precious jewelry makes many of them unattainable for most people, and hence the growth in the volume of costume or almost costume jewelry. This teaches people that alternatives are also good, that you can find great decorations at a low cost. This, in my opinion, in the coming years will lead to a greater shift towards materials made by man, as I already wrote about this at the beginning of the year.
When we consider all these factors (and others), we inevitably come to the conclusion that we are experiencing a social change that has begun to change the way the economy works. In the jewelry industry, we celebrated the rapid flowering of the era of consumption from about the early 60's to the mid-80s of the last century. There was a rapid growth of shopping centers and, accordingly, the supply grew. About twelve years ago, this expansion stopped and the reverse movement began, which continues to this day. The United States is a fully mature market, and as retail continues to change in response to the demographic changes just described, we will see the emergence of new winners at a time when many traditional retail formats will come to naught.
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