A Washington, D.C., Starbucks that is slated to close. The chain is wooing the budget-minded.
Unsold SUVs on a used-car lot. The move away from gas guzzlers is emblematic of what one marketer calls "an anti-bling thing."
Examples of the mind-set shift abound. Large-vehicle sales declined 5.5 percent during the first six months of 2008, while compact-car sales rose 33 percent, according to J. D. Power & Associates. Piaggio, the company that makes Vespas, reports that scooter sales in June were up 146 percent over a year earlier. Even daily lattes have been cut; in July, Starbucks announced that it was closing 600 stores in response to reduced consumer traffic. The NPD Group has found that the number of meals made at home has been steadily rising since 2001. "We're coming back to the home," says Harry Balzer, vice president of the firm.
For some people, the downscaling has more to do with a changing definition of cool than with budgeting. The summer blockbuster WALL-E depicts a future world where spending and waste have spiraled so out of control that the Earth becomes a giant landfill. Magazines play up how celebrity moms like Victoria Beckham, aka Posh Spice, and Heidi Klum shop at Target for their kids. A simplification industry has spawned an annual Buy Nothing Day, books and blogs about not purchasing anything for a year, and Real Simple magazine. One recent post on the Consumerist, an irreverent website dedicated to standing up to corporations, contemplated the Geo Metro's transformation from "weak to chic." Consumerist's senior editor, Meg Marco, who used to drive the unstylish but fuel-efficient vehicle herself, says, "When gas is over $4 per gallon, I don't think anyone is any less 'cool' simply because they're seen driving a compact car."
Young consumers in their 20s may be most affected by the shift to simplicity. In focus group research for her upcoming book on generation Y, consumer psychologist Kit Yarrow has found growing interest in secondhand stores. Young shoppers tell her that it's a "way to get new stuff without creating stuff," she says. And becauseconsumers often learn their lifetime shopping habits during their developmental years, Mandy Putnam, vice president at TNS RetailForward, says that members of generation Y may be permanently shaped by today's lessons in austerity, much as their great-grandparents were by the Great Depression.
There's also an environmental component, says personal finance guru David Bach. "I just sat at the kitchen table with my 5-year-old son talking about 'reduce, reuse, recycle'—I couldn't have told you that at 5," Bach says. He recently wrote Go Green, Live Rich, which focuses on how helping the Earth can coincide with smart financial choices, such as avoiding bottled water and starting a vegetable garden.
Russell Simon, a 26-year-old communications manager for Carbonfund.org, a non-profit, embodies that way of thinking. He furnished his Washington, D.C., apartment with used furniture found on Craigslist, uses a canvas bag to bring home groceries, and gave up his '99 Subaru Impreza Wagon. He fills his time with activities, like swing dance lessons, that don't involve buying things. While he's glad his anticonsumption ways have a positive effect on the environment, Simon's motivations are more self-serving. "It's about uncluttering my mind, uncluttering my space, and allowing me to focus on things that matter," he says.
Cindee Mazzanti, a self-employed 57-year-old living in upstate New York, started downsizing in 2001, when the end of the dot-com bubble made her realize the importance of living within one's means. She sold her home and used the equity to pay off her debts and purchase a smaller home without a mortgage. She also traded in her Ford Freestyle SUV for a more thrifty Ford Focus to lower her own fuel costs and help reduce America's demand for foreign oil. Her monthly living expenses shrank from $5,600 to $1,200. Without debt, she says, she feels free.
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