Over the past few months, consumer spending has stalled. Having just come out of a recession I’ve got mixed feelings about this. None of us want to be in the same position we were 18 months ago, but we (should) also know that unfettered growth is stupid and unsustainable.* So as people spend less on clothes, goods and luxury items what will they spend their money on?
I think certain items, services and experiences will become much more cherished. Things like eating out (probably with a voucher) and going for coffee, which have both become the new mecca of leisure activities, will still hold out. The temptation is there, and over the last 5 years they’ve become ingrained. These are no longer treats, but part of our lifestyle, and there’s somewhere on just about every street that caters for this.
Certain hi-tech goods are also now being seen as a necessity. We’re starting to think that we can’t possibly manage life without an iPhone (or equivalent), and before long we’ll be having the “can you remember what it was like before” conversations about smartphones. Having access to the myriad of online services and diversions is now essential for most urban lifestyles.
Equipped with this technology, we there’s less of a need to spend on DVDs and other physical forms of entertainment. Slowly, we’ll substitute this for on-demand TV, digital radio stations, free online news and social networks. After all, what’s more entertaining than people? Nothing beats this form of free entertainment put on by our friends.
Music and film are still huge parts of our culture but so is new media. Entrepreneurs are targeting emerging social technologies as the new way to make a profit. Now what if someone starts charging for these “free” forms of entertainment? If we’re spending less as consumers, will advertisers still be spending and in turn, will these news and media sources still be able to support themselves? The ad-spend vs subscriber battle is entering another phase.
* The last few years of spending beyond our means probably reduces our need for consumer goods. If we’ve already got a flat screen TV will we really splash out on an HD TV? Splurging now might be good for producers in the short term but long term it ruins their sales. Banks AND retailers need to think more long term.