The post-crisis consumer
-
0:01 - 0:03Thirteen trillion dollars in wealth
-
0:03 - 0:06has evaporated over the course
of the last two years. -
0:07 - 0:09We've questioned the future of capitalism.
-
0:09 - 0:11We've questioned the financial industry.
-
0:11 - 0:13We've looked at our government oversight.
-
0:13 - 0:15We've questioned where we're going.
-
0:15 - 0:16And yet, at the same time,
-
0:16 - 0:19this very well may be
a seminal moment in American history, -
0:19 - 0:24an opportunity for the consumer
to actually take control and guide us -
0:24 - 0:26to a new trajectory in America.
-
0:26 - 0:27I'm calling this The Great Unwind.
-
0:27 - 0:29(Laughter)
-
0:29 - 0:31And the idea is a simple, simple idea,
-
0:31 - 0:35which is the fact that the consumer
has moved from a state of anxiety -
0:35 - 0:36to action.
-
0:36 - 0:41Consumers who represent 72 percent
of the GDP of America -
0:41 - 0:44have actually started, just like banks
and just like businesses, -
0:44 - 0:48to de-leverage, to unwind
their leverage in daily life, -
0:48 - 0:51to remove themselves
from the liability and risk -
0:51 - 0:54that presents itself as they move forward.
-
0:54 - 0:57So, to understand this --
and I'm going to stress this -- -
0:57 - 0:59it's not about the consumer
being in retreat. -
0:59 - 1:00The consumer is empowered.
-
1:00 - 1:04To understand this, we'll step back
and look at what's happened -
1:04 - 1:06over the last year and a half.
-
1:06 - 1:08So if you've been gone,
this is the CliffsNotes -
1:08 - 1:10on what's happened in the economy.
-
1:10 - 1:11(Laughter)
-
1:11 - 1:14Unemployment up. Housing values down.
Equity markets down. -
1:14 - 1:15Commodity prices are like this.
-
1:15 - 1:18If you're a mom trying to manage a budget,
-
1:18 - 1:20and oil was 150 dollars
a barrel last summer, -
1:20 - 1:22and it's somewhere between 50 and 70,
-
1:22 - 1:23do you plan vacations?
-
1:23 - 1:24How do you buy?
-
1:24 - 1:27What's your strategy in your household?
Will the bailout work? -
1:27 - 1:31We have national debt, Detroit,
currency valuations, health care -- -
1:31 - 1:32all these issues facing us.
-
1:32 - 1:35You put them all together,
mix them up in a bouillabaisse, -
1:35 - 1:38and you have consumer confidence
that's basically a ticking time bomb. -
1:38 - 1:41In fact, let's go back and look
at what caused this crisis, -
1:41 - 1:43because the consumer,
all of us, in our daily lives, -
1:44 - 1:46actually contributed
a large part to the problem. -
1:46 - 1:49This is something I call
the 50-20 paradox. -
1:49 - 1:52It took us 50 years
-
1:52 - 1:55to reach annual savings ratings
of almost 10 percent. -
1:55 - 1:57Fifty years.
-
1:57 - 1:59Do you know what this was right here?
This was World War II. -
2:00 - 2:01Do you know why savings was so high?
-
2:01 - 2:05There was nothing to buy,
unless you wanted to buy some rivets. -
2:05 - 2:08What happened, though,
over the course of the last 20 years, -
2:08 - 2:12we went from a 10 percent savings rate
to a negative savings rate. -
2:12 - 2:13Because we binged.
-
2:13 - 2:17We bought extra-large cars,
supersized everything, -
2:17 - 2:20we bought remedies
for restless leg syndrome. -
2:20 - 2:24All these things together
basically created a factor -
2:24 - 2:27where the consumer drove us
headlong into the crisis -
2:27 - 2:28that we face today.
-
2:28 - 2:34The personal debt-to-income ratio
basically went from 65 to 135 percent -
2:34 - 2:37in the span of about 15 years.
-
2:37 - 2:39So consumers got over-leveraged.
-
2:39 - 2:42And of course our banks did as well,
as did our federal government. -
2:42 - 2:44This is an absolutely staggering chart.
-
2:44 - 2:49It shows leverage,
trended out from 1919 to 2009. -
2:49 - 2:51And what you end up seeing
is the whole phenomenon -
2:51 - 2:55that we are actually stepping forth
and basically leveraging -
2:55 - 2:58future education, future children
in our households. -
2:59 - 3:02So if you look at this in the context
of visualizing the bailout, -
3:02 - 3:04what you can see is,
if you stack up dollar bills, -
3:04 - 3:06first of all, 360,000 dollars
-
3:06 - 3:09is about the size of a five-foot-four guy.
-
3:09 - 3:13But if you stack it up, you see
this amazing, staggering amount of dollars -
3:13 - 3:16that have been put into the system
to fund and bail us out. -
3:16 - 3:18So this is the first 315 billion.
-
3:18 - 3:20But I read this fact the other day,
-
3:20 - 3:23that one trillion seconds
equals 32,000 years. -
3:23 - 3:25So if you think about that,
-
3:25 - 3:27the context, the casualness
with which we talk about -
3:27 - 3:30trillion-dollar bailout here
and trillion there, -
3:30 - 3:33we are stacking ourselves up
for long-term leverage. -
3:33 - 3:36However, consumers have moved.
-
3:36 - 3:38They are taking responsibility.
-
3:38 - 3:40What we're seeing
is an uptake in the savings rate. -
3:40 - 3:43In fact, 11 straight months
of savings have happened -
3:43 - 3:45since the beginning of the crisis.
-
3:45 - 3:47We're working our way back up
to that 10 percent. -
3:47 - 3:49Also, remarkably, in the fourth quarter,
-
3:49 - 3:52spending dropped
to its lowest level in 62 years -- -
3:52 - 3:55almost a 3.7 percent decline.
-
3:55 - 3:59Visa now reports that more people
are using debit cards than credit cards. -
3:59 - 4:02So we're starting to pay for things
with money that we have. -
4:02 - 4:06And we're starting to be much more careful
about how we save and invest. -
4:06 - 4:08But that's not really the whole story,
-
4:08 - 4:11because this has also been a dramatic
time of transformation. -
4:11 - 4:14And you've got to admit,
over the last year and a half, -
4:14 - 4:16consumers have been doing
some weird things. -
4:16 - 4:18It's pretty staggering,
what we've lived through. -
4:18 - 4:21If you take into account
that 80 percent of all Americans -
4:21 - 4:22were born after World War II,
-
4:22 - 4:24this was essentially our Depression.
-
4:24 - 4:27And so, as a result,
some crazy things have happened. -
4:27 - 4:28I'll give you some examples.
-
4:28 - 4:33Let's talk about dentists, vasectomies,
guns and shark attacks. -
4:33 - 4:35(Laughter)
-
4:35 - 4:39Dentists report molars --
people grinding their teeth, -
4:39 - 4:41coming in and reporting
that they've had stress. -
4:41 - 4:44So there's an increase in people
having to have their fillings replaced. -
4:44 - 4:48Gun sales, according to the FBI,
who does background checks, -
4:48 - 4:51are up almost 25 percent since January.
-
4:51 - 4:56Vasectomies are up 48 percent,
according to the Cornell Institute. -
4:56 - 4:58And lastly, but a very good point,
-
4:58 - 5:01hopefully not related
to the former point I just made, -
5:01 - 5:04which is that shark attacks
are at their lowest level from 2003. -
5:04 - 5:06Does anybody know why?
-
5:06 - 5:07(Laughter)
-
5:07 - 5:08No one's at the beach.
-
5:08 - 5:10So there's a bright side to everything.
-
5:10 - 5:13But seriously, what we see happening,
-
5:13 - 5:16and the reason I want to stress
that the consumer is not in retreat, -
5:16 - 5:18is that this is a tremendous opportunity
-
5:18 - 5:20for the consumer who drove us
into this recession -
5:20 - 5:22to lead us right back out.
-
5:22 - 5:25What I mean by that is we can
move from mindless consumption -
5:25 - 5:27to mindful consumption.
-
5:27 - 5:29Right?
-
5:29 - 5:30(Applause)
-
5:30 - 5:32If you think about the last three decades,
-
5:32 - 5:35the consumer has moved
from savvy about marketing in the '90s, -
5:35 - 5:39to gathering all these amazing social
and search tools in this decade. -
5:39 - 5:42But the one thing holding them back
is the ability to discriminate. -
5:42 - 5:44By restricting their demand,
-
5:44 - 5:47consumers can actually align
their values with their spending, -
5:47 - 5:51and drive capitalism and business
to not just be about more, -
5:51 - 5:52but to be about better.
-
5:52 - 5:54We're going to explain that right now.
-
5:54 - 5:57Based on Y&R's BrandAsset Valuator,
-
5:57 - 5:59proprietary tool of VML
and Young & Rubicam, -
5:59 - 6:02we set out to understand
what's been happening in the crisis -
6:02 - 6:04with the consumer marketplace.
-
6:04 - 6:06We found a couple
of really interesting things. -
6:06 - 6:09We're going to go
through four value shifts -
6:09 - 6:11that we see driving
new consumer behaviors, -
6:11 - 6:13that offer new management principles.
-
6:13 - 6:15The first cultural value shift we see
-
6:15 - 6:18is this tendency toward something
we call "liquid life." -
6:18 - 6:19This is the movement
-
6:19 - 6:22from Americans defining
their success on having things -
6:22 - 6:23to having liquidity,
-
6:23 - 6:26because the less excess
that you have around you, -
6:26 - 6:28the more nimble and fleet of foot you are.
-
6:28 - 6:31As a result, déclassé consumption is in.
-
6:31 - 6:34Déclassé consumption is the whole idea
that spending money frivolously -
6:34 - 6:37makes you look a little bit anti-fashion.
-
6:37 - 6:40The management principle
is dollars and cents. -
6:40 - 6:43So let's look at some examples
of this déclassé consumption -
6:43 - 6:44that falls out of this value.
-
6:44 - 6:46The first thing is,
something must be happening -
6:46 - 6:48when P. Diddy vows to tone down his bling.
-
6:49 - 6:50(Laughter)
-
6:50 - 6:52But seriously, we also have
this phenomenon -
6:52 - 6:54on Madison Avenue and in other places,
-
6:54 - 6:57where people are actually
walking out of luxury boutiques -
6:57 - 7:01with ordinary, generic paper bags
to hide the brand purchases. -
7:01 - 7:04We see high-end haggling in fashion today,
-
7:04 - 7:06high-end haggling
for luxury and real estate. -
7:06 - 7:09We also see just a relaxing of ego,
-
7:09 - 7:11and sort of a dismantling of artifice.
-
7:11 - 7:15This is a story on the yacht club
that's all basically blue collar. -
7:15 - 7:17Blue-collar yacht club --
where you can join, -
7:17 - 7:20but you've got to work in the boatyard
as condition of membership. -
7:20 - 7:25We also see the trend toward tourism
that's a little bit more low-key: -
7:25 - 7:28agritourism -- going to vineyards
and going to farms. -
7:28 - 7:32And then we also see this movement
forward from dollars and cents. -
7:32 - 7:34What businesses can do to connect
with these new mindsets -
7:34 - 7:36is really interesting.
-
7:36 - 7:37A couple things that are kind of cool.
-
7:37 - 7:41One is that Frito-Lay figured out
this liquidity thing with their consumer. -
7:41 - 7:45They found their consumer had more
money at the beginning of the month, -
7:45 - 7:46less at the end of the month.
-
7:46 - 7:48So they started to change their packaging:
-
7:48 - 7:50larger packs at the beginning
of the month, -
7:50 - 7:52smaller packaging at the end of the month.
-
7:52 - 7:55Really interestingly, too,
was the San Francisco Giants. -
7:55 - 7:57They've just instituted dynamic pricing.
-
7:57 - 8:00It takes into account everything
from the pitcher match-ups, -
8:00 - 8:02to the weather, to the team records,
-
8:02 - 8:05in setting prices for the consumer.
-
8:05 - 8:10Another quick example of these types
of movements is the rise of Zynga. -
8:10 - 8:12Zynga has risen on the consumer's desire
-
8:12 - 8:14to not want to be locked in to fixed cost.
-
8:14 - 8:17Again, this theme is about variable
cost, variable living. -
8:17 - 8:19So micro-payments have become huge.
-
8:19 - 8:21And lastly, some people are using Hulu
-
8:21 - 8:23as a device to get rid
of their cable bill. -
8:23 - 8:27So, really clever ideas there
that are being taken ahold of -
8:27 - 8:29and that marketers
are starting to understand. -
8:29 - 8:32The second of the four values
is this movement toward -
8:32 - 8:33ethics and fair play.
-
8:33 - 8:36We see that play itself out
with empathy and respect. -
8:36 - 8:38The consumer is demanding it.
-
8:38 - 8:41And, as a result, businesses
must provide not only value, -
8:41 - 8:42but values.
-
8:42 - 8:46Increasingly, consumers are looking
at the culture of the company, -
8:46 - 8:47at their conduct in the marketplace.
-
8:47 - 8:49So we see with empathy and respect
-
8:49 - 8:52lots of really hopeful things
come out of this recession. -
8:52 - 8:53I'll give you a few examples.
-
8:53 - 8:56One is the rise toward communities
and neighborhoods, -
8:56 - 9:00and increased emphasis on your neighbors
as your support system. -
9:00 - 9:04Also, a wonderful by-product
of a really lousy thing, -
9:04 - 9:05which has been unemployment,
-
9:05 - 9:08is a rise in volunteerism
that's been noted in our country. -
9:08 - 9:12We also see the phenomenon --
some of you may have "boomerang kids" -- -
9:12 - 9:13these are "boomerang alumni,"
-
9:13 - 9:16where universities are actually
reconnecting with alumni -
9:16 - 9:19and helping them with jobs,
sharing skills and retraining. -
9:19 - 9:21We also talked about character
and professionalism. -
9:21 - 9:25We had this miracle on the Hudson
in New York City in January, -
9:25 - 9:29and suddenly Sully has become
a key name on BabyCenter. -
9:29 - 9:30(Laughter)
-
9:30 - 9:33So, from a value and values standpoint,
-
9:33 - 9:36what companies can do is connect
in lots of different ways. -
9:36 - 9:38Microsoft is doing something wonderful.
-
9:38 - 9:41They are actually vowing to retrain
two million Americans with IT training, -
9:41 - 9:45using their existing infrastructure
to do something good. -
9:45 - 9:47Also, a really interesting
company is GORE-TEX. -
9:47 - 9:50GORE-TEX is all about
personal accountability -
9:50 - 9:52of their management and their employees,
-
9:52 - 9:55to the point where they really
kind of shun the idea of bosses. -
9:55 - 9:58But they also talk about the fact
that their executives -- -
9:58 - 10:01all of their expense reports
are put onto their company intranet -
10:01 - 10:02for everyone to see.
-
10:02 - 10:04Complete transparency.
-
10:04 - 10:06Think twice before you have
that bottle of wine. -
10:06 - 10:08(Laughter)
-
10:08 - 10:10The third of the four laws
of post-crisis consumerism -
10:10 - 10:12is about durable living.
-
10:12 - 10:14We're seeing in our data
that consumers are realizing -
10:14 - 10:16this is a marathon, not a sprint.
-
10:16 - 10:19They're digging in and looking
for ways to extract value -
10:19 - 10:21out of every purchase they make.
-
10:21 - 10:24Witness the fact that Americans
are holding on to their cars -
10:24 - 10:28longer than ever before:
9.4 years on average, in March. -
10:28 - 10:29A record.
-
10:29 - 10:33We also see the fact that libraries
have become a huge resource for America. -
10:33 - 10:37Did you know that 68 percent
of Americans now carry a library card? -
10:37 - 10:39The highest percentage ever
in our nation's history. -
10:40 - 10:43So what you see in this trend
is also the accumulation of knowledge. -
10:43 - 10:45Continuing education is up.
-
10:45 - 10:48Everything is focused
on betterment, training, -
10:48 - 10:49development and moving forward.
-
10:49 - 10:52We also see a big DIY movement.
-
10:52 - 10:57I was fascinated to learn that 30 percent
of all homes in America -
10:57 - 10:58are actually built by owners.
-
10:58 - 11:00That includes cottages and the like,
-
11:00 - 11:01but 30 percent.
-
11:01 - 11:04People are getting their hands dirty,
rolling up their sleeves. -
11:04 - 11:05They want these skills.
-
11:05 - 11:09We see it with the phenomenon of raising
backyard hens, chickens and ducks. -
11:09 - 11:12And when you work out the math,
they say it doesn't work, -
11:12 - 11:13but the principle is there;
-
11:13 - 11:16it's about being sustainable
and taking care of yourself. -
11:16 - 11:18Then we look at the High Line
in New York City, -
11:18 - 11:21an excellent use of reimagining
existing infrastructure -
11:21 - 11:22for something good,
-
11:22 - 11:24which is a brand-new park
in New York City. -
11:24 - 11:29So what brands can do, and companies,
is pay dividends to consumers, -
11:29 - 11:30be a brand that lasts,
-
11:30 - 11:32offer transparency,
-
11:32 - 11:34promise you're going to be there
beyond today's sale. -
11:34 - 11:36Perfect example of that is Patagonia.
-
11:36 - 11:38Patagonia's "Footprint Chronicles"
-
11:38 - 11:42basically goes through and tracks
every product they make, -
11:42 - 11:44and gives you social responsibility,
-
11:44 - 11:47and helps you understand the ethics
behind the product they make. -
11:47 - 11:49Another great example is Fidelity.
-
11:49 - 11:53Rather than instant cash-back rewards
on your credit or debit purchases, -
11:53 - 11:57this is about 529 rewards
for your student education. -
11:58 - 12:00Or the interesting company Sunrun.
-
12:00 - 12:01I love this company.
-
12:01 - 12:03They've created a consumer collective
-
12:03 - 12:05where they put solar panels on households
-
12:05 - 12:07and create a consumer-based utility,
-
12:07 - 12:09where the electricity they generate
-
12:09 - 12:12is basically pumped back out
into the marketplace. -
12:12 - 12:13So it's a consumer-driven co-op.
-
12:14 - 12:17The fourth post-crisis
consumerism that we see -
12:17 - 12:20is this movement
about "return to the fold." -
12:20 - 12:21It's incredibly important right now.
-
12:21 - 12:24Trust is not parceled out, as we all know.
-
12:24 - 12:26It's now about connecting
to your communities, -
12:26 - 12:28connecting to your social networks.
-
12:28 - 12:30In my book, I talked about the fact
-
12:30 - 12:32that 72 percent of people trust
what other people say -
12:32 - 12:34about a brand or a company,
-
12:34 - 12:36versus 15 percent on advertising.
-
12:36 - 12:40So in that respect, cooperative
consumerism has really taken off. -
12:40 - 12:43This is about consumers working
together to get what they want -
12:43 - 12:44out of the marketplace.
-
12:44 - 12:46Let's look at a couple of quick examples.
-
12:46 - 12:47The artisanal movement is huge:
-
12:48 - 12:51everything about locally
derived products and services, -
12:51 - 12:52supporting your local neighborhoods,
-
12:52 - 12:55whether it's cheeses,
wines and other products. -
12:55 - 12:58Also this rise of local currencies.
-
12:58 - 13:01Realizing that it's difficult
to get loans in this environment, -
13:01 - 13:03you're doing business
with people you trust -
13:03 - 13:04in your local markets.
-
13:04 - 13:08So this rise of local currency
is another really interesting phenomenon. -
13:08 - 13:12And then they did a recent report
I thought was fascinating. -
13:12 - 13:15They actually started, in certain
communities in the United States, -
13:15 - 13:17to publish people's electricity usage.
-
13:17 - 13:20And what they found out is when
that was available for public record, -
13:20 - 13:24the people's electricity usage
in those communities dropped. -
13:25 - 13:27Then we also look
at the idea of cow-pooling, -
13:27 - 13:31which is the whole phenomenon
of consumers organizing together -
13:31 - 13:35to buy meat from organic farms,
that they know is safe and controlled -
13:35 - 13:37in the way that they want it
to be controlled. -
13:37 - 13:41And then there's this other really
interesting movement in California, -
13:41 - 13:43which is about carrot mobs.
-
13:43 - 13:46The traditional thing would be
to boycott, right? Have a stick. -
13:46 - 13:47Well, why not have a carrot?
-
13:47 - 13:50So these are consumers organizing,
pooling their resources -
13:50 - 13:53to incentify companies to do good.
-
13:53 - 13:56And then we look at what companies can do.
-
13:56 - 13:59This is all the opportunity
about being a community organizer. -
13:59 - 14:02You have to realize
that you can't fight and control this. -
14:02 - 14:04You actually need to organize it.
-
14:04 - 14:07You need to harness it.
You need to give it meaning. -
14:07 - 14:10And there's lots of really
interesting examples here. -
14:10 - 14:15First is just the rise of the fact
that Zagat's has actually moved out of -
14:15 - 14:17and diversified from rating restaurants,
-
14:17 - 14:19into actually rating health care.
-
14:19 - 14:21So what credentials does Zagat's have?
-
14:21 - 14:22Well, they have a lot,
-
14:22 - 14:24because it's their network of people.
-
14:24 - 14:27So that becomes
a very powerful force for them -
14:27 - 14:29to make their brand more elastic.
-
14:29 - 14:31Then you look at the phenomenon of Kogi.
-
14:32 - 14:35This Kogi doesn't exist.
It's a moving truck. -
14:35 - 14:37It's a moving truck through L.A.,
-
14:37 - 14:39and the only way you can find it
is through Twitter. -
14:39 - 14:40(Laughter)
-
14:40 - 14:41Or you look at
-
14:41 - 14:46Johnson & Johnson's "Momversations,"
a phenomenal blog that's been built up, -
14:46 - 14:51where J&J basically is tapping
into the power of mommy bloggers, -
14:51 - 14:55allowing them to create a forum
where they can communicate and connect. -
14:55 - 15:00And it's also become a very valuable
advertising revenue for J&J as well. -
15:00 - 15:04This, plus the fact that you've got
phenomenal work from CEOs, -
15:04 - 15:07from Ford to Zappos,
connecting on Twitter, -
15:07 - 15:08creating an open environment,
-
15:08 - 15:11allowing their employees
to be part of the process, -
15:11 - 15:13rather than hidden behind walls.
-
15:13 - 15:17You see this rising force
in total transparency and openness -
15:17 - 15:19that companies are starting to adopt,
-
15:19 - 15:21all because the consumer is demanding it.
-
15:21 - 15:23So when we look at this and step back,
-
15:23 - 15:27what I believe is that the crisis
that exists today is definitely real. -
15:28 - 15:30It's been tremendously
powerful for consumers. -
15:30 - 15:34But at the same time,
this is also a tremendous opportunity. -
15:34 - 15:37The Chinese character for crisis
is actually the same side -
15:37 - 15:38of the same coin.
-
15:38 - 15:40Crisis equals opportunity.
-
15:40 - 15:44What we're seeing with consumers
right now is the ability for them -
15:44 - 15:46to actually lead us forward
out of this recession. -
15:46 - 15:51So we believe that values-driven spending
will force capitalism to be better: -
15:51 - 15:53it will drive innovation;
-
15:53 - 15:55it will make longer-lasting products;
-
15:55 - 15:58it will create better,
more intuitive customer service; -
15:58 - 16:01and it will give us the opportunity
to connect with companies -
16:01 - 16:03that share the values that we share.
-
16:03 - 16:05So when we look back and step out at this
-
16:05 - 16:08and see the beginning of these trends
that we're seeing in our data, -
16:08 - 16:11we see a very hopeful picture
for the future of America. -
16:11 - 16:12Thank you very much.
-
16:12 - 16:14(Applause)
- Title:
- The post-crisis consumer
- Speaker:
- John Gerzema
- Description:
-
John Gerzema says there's an upside to the recent financial crisis -- the opportunity for positive change. Speaking at TEDxKC, he identifies four major cultural shifts driving new consumer behavior and shows how businesses are evolving to connect with thoughtful spending.
- Video Language:
- English
- Team:
- closed TED
- Project:
- TEDTalks
- Duration:
- 16:14
Krystian Aparta commented on English subtitles for The post-crisis consumer | ||
Krystian Aparta edited English subtitles for The post-crisis consumer | ||
Krystian Aparta edited English subtitles for The post-crisis consumer | ||
TED edited English subtitles for The post-crisis consumer | ||
TED added a translation |
Krystian Aparta
The English transcript was updated on 5/29/2017.