DEARBORN -- Predicting the future in an ever-changing world isn’t ever easy. But for Ford, it’s a vital aspect of planning. As the Global Consumer Trends and Futuring Manager for Ford Motor Company, Sheryl Connelly is responsible for identifying and tracking trends that will shape consumers' value, attitudes and beliefs in the future. In a new monthly column on @Ford, Connelly will share unique insight into trends outside the automotive industry with specific focus on social, technology, economic, environment and political arenas.
Where will the road to economic recovery lead? Many are asking that question in the wake of the recent recession. A more critical question might be: Will consumer spending return to the same level it was prior to the 2008 economic meltdown?
I think not.
I am not an economist, financial analyst or even very good at balancing my own checkbook, so you may wonder how I came to this conclusion. As manager of Global Consumer Trends and Futuring for Ford Motor Company, I study things that are happening outside the automotive industry with the objective of gaining insight into what will drive consumers’ values, attitudes and behaviors in the future. And there are a number of indicators that suggest we are not likely to see a return of the “spending spree” characteristics of the late 90s and early 2000s.
The Era of Excess has Come to an End
Taxpayers will continue to feel the sting of bailing out the banking and automotive industries whose executives led very lavish lifestyles, not to mention the many homeowners who purchased houses and assumed mortgages that they could not afford. Not surprisingly, conspicuous consumption will fall out of favor and ostentatious displays of wealth will be regarded with great suspicion.
Careful Consumption and Ethical Consumption
Consumers will move away from making spontaneous purchases and instead buy goods and services in a more thoughtful and deliberate way. But that doesn’t mean that emotion will not play a role as well. The ethical consumption trend tells us that consumers will see the products and services they use as extensions of themselves and, more importantly, reflections of their values. This explains why some people will be willing to pay a premium for blood-free diamonds, fair-trade coffee and organic produce. We also can’t overlook the steady drum beat of “sustainability matters” that has quietly conditioned us to “take only what we need.”
Spending Habits will Shift with the Generations
Baby Boomers were born in an era of economic prosperity and grew up to become big spenders – quite literally. When they reached their peak earning years, many purchased big homes, big SUVs and big toys, like boats, jet skis and vacation homes. But as Boomers enter their retirement years, lifestyle changes and financial necessity will shift their spending patterns. Although Generation Xers are nearing their peak earning years, they have never spent quite as lavishly on material goods as the Boomers, and they are not likely to start.
Experience, Entertainment and Escape
In mature markets, consumers will be increasingly drawn to experiences rather than fixed material goods. Experiences – like being pampered at the spa, enjoying exotic travel and engaging in extreme sports – are becoming the new luxury. Status is achieved through the rich stories shared afterward.
The Joy of Living
When material goods fail to provide lasting happiness, consumers will actively seek to bring more joy or meaning to their lives in other ways. This trend will take many forms. For some, it may mean slowing down the pace of everyday life or simplifying the world around them. For others, it may mean breaking free from the hassles of permanent ownership and possessions.
Only Time will Tell
Of course no one knows with any certainty whether or not consumer spending will return to pre-2008 levels, and economic experts remain divided on the matter. But I suspect that most would agree that this time of recovery puts American consumers at a crossroads. One path would return consumers to the status quo – living large on instant gratification and rising debt. The other path would bring with it a seismic cultural shift, one of thoughtful reflection and careful restraint. Only time will tell. But I am hoping for the latter.