February Newsletter : On Grasshoppers & Ants
Years after the Lost Decade of the 1990’s in Japan there’s still an entrenched frugality there, according to the New York Times. Car sales have fallen by half since 1990. Firms have rebounded but pay packets have shrunk. Expecting goods to be even cheaper in future, people hold onto their money. It makes the Japanese economy vulnerable when exports fall.
It’s the untold downside to the fable of the grasshopper and the ant - you know the one – grasshopper fritters his money and his time, ant rigorously prepares for a rainy day. Winter comes. Grasshopper dies.
Western economies, especially the US, had come to depend more and more on the grasshoppers when suddenly last year, they disappeared. Now we’re stuck with the ants and would-be ants.
At Windshift we’re just conducting our Retailer Adaptation Study and already we’re seeing a significant metamorphosis among many of these businesses as a direct result of the way their customers are behaving. Like the Japanese, New Zealanders are heading off in a different direction, where-
- Our indulgences will be smaller and more carefully selected
- We’ll continue to be very price sensitive
- We’ll be drawn to bargains and simplicity and ‘wardrobe basics’
But that’s just the everyday reality. Overall it’s quite possible that the whole shape and direction of our society will change.
Think of it this way – in the past 100 years we’ve changed from a global economy based on discovering and exploiting natural resources to one which feeds mostly on itself. Or at least on those with money to spend. Over time we became more and more dependent on less and less solvent consumers spending more and more money until the risks became suddenly intolerable. So bang – goodbye to grasshoppers on all sides of the equation.
Well not goodbye. The sub-prime class may not be back any time soon, but those who farmed them will survive. If we think of those people in the top twenty percent of incomes who had been rewarded for their specialised education or their entrepreneurship and for their global desirability – they’re the ones whose raison d’etre has been fully smacked about. Right about now they’re riffing on the joys of post-materialism, while the true ants complete the societal makeover. They’ll come back as the smart new entrepreneurs of the future. But probably not in hedge funds.
So how do we ants and ant impersonators go about boldly re-shaping society?
We do it with our collective actions, hopes and fears – because so many of us are thinking and behaving in the same way. In fact we’re already doing it, just by approving some political actions over others, making some decisions more than others, favouring some firms over others. We rationalise the expenditure we do make by whether there’s enough value in the equation – enough meaning, enough necessity, enough quality or expediency. We gravitate to those who help us make our money go further and pay less attention to those that don’t.
Whether as consumers or as business people, we’ve gone back to the new basics. We favour some business attributes over others. Things like Smartness. Simplicity. Cheap as Chips-ness. Good Quality. And Empathy.
I don’t remember it being like this in the early nineties – the last time we had a major recession. I think we were just annoyed that our quest for conspicuous consumption had been halted. We though the future traders’ champagne and lobster lunches at Antoines were pretty over the top and we were ashamed that New Zealand was regarded as having a share market of cowboys who had gone and destroyed our neo-con dreams. But we weren’t going around saying “less is more”.
So maybe we’re all enjoying frugality now because it feels right. We’ve had our consumerist affair and we’re over it. We're looking for a better and more secure way of life but we're not going to risk all to get it. Just as in Japan, as long as there’s enough volatility and uncertainty to convince ourselves that trouble isn’t far away, we’ll continue to be cautious and alert.
And there will be enough volatility and uncertainty. To paraphrase Richard Nixon, We are all ants now.
Cheers
Jill
Jill Caldwell is Director of Windshift Communications Ltd. Click Here to contact Jill directly This is a free monthly newsletter provided to direct subscribers only. No further use is made of subscriber information. [Copyright Windshift Communications Ltd 2006]
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". . .To paraphrase Richard Nixon, We are all ants now.”..
