Bursting Bubbles: Frugality, No-Buy, and Societal Trends
Issue 163, June 6, 2024
We recently wrote about a few socioeconomic bubbles we suggested were about to burst. As fate would have it, one of our predictions about customer backlash against price hikes, inflation, asymmetrical stock market performance, and missteps by brands manifested into a renaissance of the no-buy day which was transformed into no-buy July to the no-buy year and then the no-buy challenge.
Holding Back
As observers of consumer behavior and leadership strategy, we have conflated the public discontent with current economic conditions with a parallel thread of the lack of loyalty and trust, as well as a consumer shift to categorize needs and wants as commodities. Increasingly, when a product meets customers’ needs and performs, it doesn’t matter what organization or brand makes it or delivers it. For example, the importance of wearing logo-emblazoned apparel, being seen driving a particular automobile model, or shopping in a specific store is decreasing among younger generations. They are pragmatic and fickle. We surfaced the shifts toward commoditization and near rebellion against organizations that take advantage of consumers, have unsustainable business and manufacturing practices, and aren’t aligned with consumers’ personal values in our book The Truth About Transformation as well as our newsletters “Is This Us”, “Are You Sure You Matter” and “What is Normal”.
Clearly, as a consumer if you don’t trust the powers that be that control pricing and supply, or if you believe the organization is out of step with your own beliefs and values, you’re going to boycott or otherwise create some good trouble to make your voice heard. The likely outcome is that you no longer engage with that organization’s services or buy their products. In essence, you are taking a “no-buy” stance.
Many organizations have blinders on and miss pervasive, compelling trends across the marketplace. As society dynamically changes in leaps and bounds, so do individuals’ perceptions of these changes. With more information at one’s fingertips, the ease of benefiting from what others recommend and think is delivered in real-time. Then add in the ripple effect of polarization and everyone, including organizations, can find allegiances with brands that align with what they want and how they think. We continue to live in the “it’s all about me” era.
Playing monopoly across our economic system comes with consequences. Organizations that assume the public will buy at any cost and get away with manipulating consumers to appease themselves, their shareholders, and the stock market are guilty of misinformation. What’s more, they are misinforming themselves with faulty premises by dismissing the essential tool of critical thinking.
Buy Not
So, let us take a few moments to discuss no-buy. It may surprise you to know that the movement of “Buy Nothing Day was started in 1992 by activists who felt that buying stuff was polluting, our culture, our souls, our planet,” according to Adbusters magazine. The Buy Nothing Project continues this legacy by encouraging the creation of local, gift-based economies. The Buy Nothing Group started in 2013 when members noticed plastic waste was polluting their community.” (NPR) We’ve come a long way over the past 32 years, and we’ve made little progress.
Now the no-buy pledge has been socialized by TikTok, which has the potential to create a groundswell movement until its Gen Z and Alpha followers move onto another obsession. The social media trend started with a commitment not to buy nonessential items combatting overconsumption. Pragmatically, the Gen Z movement gained traction as a way to pay down credit card debt. According to Axios, credit card debt topped $1 trillion for the first time last year and delinquencies are on the rise. Gen Z currently holds more debt than any prior generation. “The no-buy movement offers tips, support, and community for those trying to shake the habit of spending more and more money and the challenge is spreading. There are Reddit groups with tens of thousands of members and viral creators on TikTok live-blogging about their experiences.” (Axios)
Even the most jaded consumer would admit that as costs have risen 20% to 30% higher than they were three years ago and incomes have failed to keep up, as reported by Sarah Wyeth, managing director, retail and consumer with S&P Global Ratings (CNN), that enough is enough. Economic indicators suggest that nearly every generation in our society is moving in the same direction as Generation Z and Alpha. The shift to transaction from loyalty may have fed into the sudden demise of Red Lobster Restaurants as consumers sought value for their dollar and en masse took advantage of the $19.99 all-you-can-eat shrimp offer. The promotion was so successful, it put Red Lobster into bankruptcy. Brands providing value to consumers in such a competitive environment may face similar fates resulting from their self-defined success. Time in today’s terms (aka speed) will surely tell.
And as collateral damage, it may be too late for our drugstores to be competitive in a marketplace of big-box retailers, pure-play electronic commerce companies, and grocery stores offering the same or similar products and services.
Frugality Is the New Norm
Adopting a frugal, low-debt lifestyle is in principle a way to counteract the doom-spending that came out of the pandemic lockdown. But if you connect the dots, it’s easy to see the larger statements consumers are making about living in an excessive, unsustainable consumer marketplace. Fast fashion piled into landfills combined with questionable child labor practices fuse into a bigger, darker outlook about the type of Capitalism that thrives on consumption.
On a higher level, the existential implication of a no-buy year, or permanent future, is to reevaluate the difference between value and meaning in terms of the accumulation of stuff. Then pack on next gen’s lack of loyalty and you have a consumer market in chaos. With little brand allegiance, Gen Z also suffers from an underlying anxiety about climate change and the sustainable future of our planet. Consumerism could be in for a massive reset.
AP reports “’The budget conscious consumer is no longer just low- or middle-income earners. By far the starkest decrease in intent to spend is coming from the higher-income groups, and those that were previously the most immune to an economic downturn are now tightening their belts,’ said Chad Lusk, managing director in global consultancy firm Alvarez & Marshal’s consumer and retail group. ‘Retailers should be thinking about targeted deals on higher-priced discretionary merchandise, too, to increase buying frequency.’ The end result has been a palpable sense of anxiety from the industry.”
Walmart reports the acquisition of affluent customers is a growing percentage of their customer base; even those with the “money and means” are seeking value for their dollars. Was this driven by the pandemic? Or is the overconsumption bell tolling for every customer demographic? The only measurable exemption from frugality seems to be when consumers seek experiences instead of stuff. They will often pay up without seeking a deal. The trend of investing in experiences/services instead of stuff has been building since the pandemic. The result is that brand loyalty, materialism, and living to work have been supplanted by working to live and a recast life/work balance.
Brands Are no Fools
Savvy marketers have stepped in and stepped up their craft of addressing consumer dissatisfaction before it spirals out of control. As soon as the no-buy challenge reached critical mass and made headlines, brands announced a flurry of price cuts.
· Walgreens quickly cut prices on more than 1,500 items online and at its stores. CNN reported that “Walgreens understands our customers are under financial strain and struggle to purchase everyday essentials, said Tracey D. Brown, Walgreens’ retail president and chief customer officer, in a release. We continue to be committed to our customers by lowering prices on over a thousand additional items, something we’ve been doing since October of 2023.”
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· Picking up the pace, Target announced, it will lower everyday regular prices on approximately 5,000 frequently shopped items across its assortment, including milk, meat, bread, soda, fresh fruit and vegetables, snacks, yogurt, peanut butter, coffee, diapers, paper towels, pet food and more.
· CNN adds “Amazon Fresh is discounting 4,000 items—both name brand and its own brand products—by up to 30% across its online and in-person stores, including frozen food, seafood, meat and pasta, though the selections will rotate weekly.”
· Walmart cut prices on nearly 7,000 products across food categories, according to Walmart U.S. CEO John Furner, but did not specify what products, according to Forbes.
· Aldi states it is cutting prices for more than 250 items, including meat, frozen foods, and snacks (Forbes).
We have to ask: Does decreasing the prices on certain categories of food and commodities mean that other products are getting price hikes to overcompensate and keep investors and the stock market at bay?
Marketing 101
We don’t know if you fall into the classification of a Skeptic (the ancient philosophy describing a person who questions or doubts accepted opinions), but we wonder why retailers are taking so much credit for a problem they caused in the first place.
It’s a great marketing ploy to turn the equation on its side and take pride in being part of a solution (when you contributed to the problem) and publicize it hoping to be seen as a trusted brand. If you are a purist, this is fake news, and these brands need to be taken to task. And by the way, this extends well beyond commodity price hikes to any organization promoting itself as a savior cleaning up its own problems. But we digress.
We want to readdress trust and authenticity. The Wall Street Journal states that “Trust is slippery.” In a surprising turn of events, new research from Schibsted reveals that “although we assume trust is built through doing the right things, instead reinforcing an existing worldview is better at establishing trust than providing diverse perspectives.” Stay on point, repeat the marketing messaging, and focus on a one-note communication. In that sense, retailers’ pride in price cuts may just succeed in making them heroes. However, if there is another consistent and contrasting message, consumers who are paying the price may see these organizations as the problem and not the good guys they proclaim to be.
A threat to slippery trust is authenticity. As posted on LinkedIn, “Authenticity is the foundation upon which trust, connection, and credibility are built for both personal and corporate brands. It is a critical element that not only attracts and retains customers but also forms the basis for enduring relationships and long-term success. Likewise, brands that prioritize authenticity in their actions, communications, and culture are more likely to thrive in today’s highly discerning marketplace.” In our digital marketplace, if brands and organizations are not authentic, it doesn’t matter how much marketing spin they use, they will lose credibility and customers.
No-Buy Metaphor
To return full circle, the no-buy movement is a metaphor for the summer of our discontent. It connects so many cultural memes into one communal pushback. It’s one thing to weather through the fractious dialogue we confront daily, the deliberate misinformation provided by social media, the undermining of our ethics and values driven by politicalization, but it’s totally another thing when American families cannot afford to feed their families or skip medical care to save what’s left of their disposable incomes. Whether it’s no-buy, unsubscribe, declutter, or nonrenewal, stakeholders are making it clear that without authenticity, transparency, and trust, they are out.
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