Depression Mentality: The Sequel – by Jeff Hirsch
The President won’t say the “R” word, but signs that consumers are feeling the pain of a stagnant economy and rising prices can be found everywhere. Maybe you’ve even made some changes yourself.
You know things are bad when people start drinking more Keystone Light and less Corona. According to IRI, as quoted in the New York Times, sales of the latter are up and the former are down. The same article cites Technomic data indicating that the number of people ordering an alcoholic drink in a restaurant fell to 31% in March from 42% last summer. That’s a big drop, especially considering that we’re talking about a category of products that people crave.
But no wonder. If you live in New York, L.A., Chicago, Miami or any other big city, one drink might set you back $15. If you’re going out as a couple or have more than one, well, you can do the math.
The 20-something urban set seems to have been on to this for quite a while. In many, many focus groups over the years, young adults have told me that they drink at home to “get a buzz” before they go out, then order sparingly and drink very slowly in the bars or restaurants to conserve funds.
Now it looks like the working and middle-classes are following suit.
I can’t help but think of my grandfather. He would never pay restaurant prices for a drink, always opting for his precisely measured jigger of Dewar’s on the rocks at home before going to dinner. And of course, once he was at the restaurant – the Early Bird special, 4:30 PM reservation – he wouldn’t order anything a la carte. If the baked potato didn’t come with dinner, that was that.
This kind of frugality was sometimes referred to as a “Depression Mentality,” after the famous economic downturn, not the state of mind. In a nation of spenders, second mortgages and excessive credit card debt, will this self-denial continue when the good times inevitably start rolling again? There is the possibility, though I doubt a good one, that chastened consumers adopt a more conservative approach to spending and saving, which would indeed cause depression – in every sense of the word – for marketers.