There has been plenty of talk lately about the economy and sagging retail sales. Despite the fact that Black Friday’s sales were seven percent above last year, all the chatter is about consumer lack of confidence and lower spending. November sales, in fact, were lower than expected. And, of course, the downside of Black Friday’s upside is that with retailers discounting so steeply, profits will take a hit. Which is something we’ll be hearing about in March 2009, or sooner.
After thirty or forty years of wanton consumerism, while others around the world still stood in breadlines, we tried to decide which pair of shoes we wanted at a variety of stores. Marketers were able to have retail experiments as they performed crosscuts of demographics (e.g. Banana Republic, Gap, Old Navy), the sectioning of psychographics (Abercrombie & Fitch, Hollister, Ruehl), the paradox of high design and low cost (Target and Ikea).
The factories have been churning out product, and the plentitude has been as astounding as Ali Baba’s horde.
But as neuroscientists and their followers like Jonah Lehrer and others have been pointing out, the act of shopping itself is not so much about spending, as it is about feasting. Axioms about the thrill of the hunt aside, the act of shopping stimulates a dopamine drip. (Dopamine is the natural drug inside our brains that gives us feelings akin to have a good meal or good sex.)
So we shop. The thrill of shopping gives us a dopamine high. We shop until our credit card can’t take it any more. And then we get another credit card and max that one out, too.
This, beyond economics, is our national problem. To stop shopping simply for the thrill of it, we will have to (literally) go through dopamine withdrawal. This will be difficult, and will result in a lot of crankiness in the store aisles.
But without money—without the low interest liquid cash that credit cards dole out—decisions will have to be made. Do we really need seventeen pairs of shoes? Will last year’s coat be warm enough this year? Does last season’s swimsuit still look okay? If my iPod Nano still works, how much do I need the one in this year’s colors? And so on.
Which means that consumers will be taking a harder look at how they spend their money. For years, if I could envision some impulse purchase on the table at a future garage sale/tag sale, I didn’t buy it. This sort of rational buying (any rationale will do) may become more mainstream.
Retailing may have to take a hard look at itself. A successful model of the past has been to look at a successful store chain and then imitate it. If we already have Abercrombie and Fitch, do we really need all those flanking copycat stores? The same goes for other category leaders. All those second and third-rate retailers down at the strip mall will have to remind themselves that following the leader leads to trailing profits. Some of those retailer spots may be empty this time next year.
It is important to note that some famous high-end brands have launched during economic recessions. Brands like Polo, Starbucks, Newman’s Own, Hard Rock Café and the recently departed Sharper Image all started during recessions.
Americans have been consumer junkies for years. We have been addicted to the dopamine drip to the point of excess. Just as too much adrenalin hardens arteries, too much dopamine has crimped debt and cash flow.
Consumption for its own sake may be on the decline, but we will continue to buy enough to stimulate our dopamine drip. Just how much is enough will depend upon how much dopamine we can live with—or without.