Financial crisis heralds era of "new seriousness"

LONDON Wed Oct 29, 2008 1:05am GMT

1 of 3. Workers continue construction work at the soon-to-open Westfield shopping centre in Shepherd's Bush, west London in this October 27, 2008 file photo.

Credit: Reuters/Toby Melville/Files

Related Topics

LONDON (Reuters) - Power tools roar as an army of workmen rushes to ensure Europe's largest city-centre shopping mall opens on time, but marketing executives say the crisis in global financial markets has accelerated a trend among consumers to reject conspicuous consumption.

The $3 billion (1.87 billion pound) Westfield centre in West London will have a strong focus on luxury when it opens on Thursday. Promotional material cites Louis Vuitton, Prada, Tiffany and Gucci among its stores but Managing Director Michael Gutman downplays these.

"We have a mass-market offer here, even though a couple of the precincts have attracted particular attention," he told Reuters by telephone.

Executives say other retailers are quietly dropping the term "luxury" from their marketing material in favour of phrases depicting shopping as relaxation and time shared with family and friends.

With credit harder to obtain, mortgage costs rising and unemployment growing in the United States, Europe and Japan, clever advertising may not be enough to persuade those who can still afford it to part with their money.

"In grim times it becomes distasteful or simply unfashionable to spend money on bling or what you might call conspicuous consumption," said Rory Sutherland, vice-chairman at advertising agency Ogilvy.

"There will be a trend towards Swedish, Lutheran-style minimalism," Sutherland predicted, referring to the modest, even austere, lifestyles favoured by Lutherans and Swedes by reputation.

Bentley-driving broker Scott David said people in the City of London financial district who could still afford it were hesitating before spending conspicuously.

"You wouldn't turn up to meeting in a brand-new Porsche. It would be seen as bad taste," he said. "You don't want to be seen to be rubbing people's faces in it."

LUXURY GOODS SLUMP

After years of strong growth, luxury goods sales are expected to fall globally by 1 percent in the fourth quarter, and may drop by up to 7 percent next year, according to a study by consulting firm Bain and Co. released this month.

U.S. sales of Porsche cars fell by 58 percent in September compared with September 2007, while overall car sales declined by 22 percent, according to figures from Autodata.

Andy Lear, head of planning at the London office of French advertising agency Publicis said the repercussions of the financial crisis -- front-page news worldwide for weeks -- were simply accelerating a trend that already existed.

"People had already been looking for something more meaningful than just chasing cash and buying things that look flashy," he said.

Certainly, some in the financial services industry who had previously enjoyed a luxury lifestyle say they are starting to question the relentless pursuit of material gain.

Investment banker Patrick, who did not want his surname to be used, said his working patterns had changed in recent months.

"I'm going home earlier and going to work later. I took my son to school last week before coming into work -- something I never did before," he said, adding that some colleagues were doing the same.

It was partly because the tough financial climate meant his employer would not be able to pay large bonuses this year, Patrick said, but it was also because the "buzz" had gone out of working long hours.

"The tone has changed ... I've got different priorities now."

Patrick is looking at ways to "give something back" to society, and is planning to work with a charity that offers debt counselling to the poor.

BOARD GAMES

Henrietta Creighton, managing director at Lifestyle Boutique which provides luxury concierge services, said business had slowed compared with last year, but clients were still spending on family celebrations.

Family board games such as Scrabble, Trivial Pursuit and Monopoly were expected to be Christmas hits as families decided against expensive holidays, Brian Goldner, chief executive of toy maker Hasbro, told Reuters in an interview last week.

The credit crisis could propel some people in firmly secular societies such as Britain towards religion, said Lord Richard Harries, a member of Britain's upper house of parliament and a former Anglican bishop.

"Perhaps after the last decades of conspicuous consumption and hollow celebrity culture we are entering what we might call an era of the new seriousness," he said in a talk on BBC radio.

Greater focus on family and a rise in altruism and spirituality often coincided with downturns, said Nick Wills-Johnson, Research fellow, at Curtain University Business School's centre for applied economics in Sydney.

The avaricious and brash 1980s, a period typified by the film "Wall Street," was followed by a global recession and what trend-watchers called the "Caring '90s," whose tone was set by George Bush Senior's pledge to make the United States "a kinder and gentler nation."

Downturns also boost anti-materialist movements, especially among the young, said David Fowler of Cambridge University, author of the book "Youth Culture in Modern Britain, 1920-1970."

"These do flourish in periods of austerity ... (a recession) exposes the superficiality of consumer-driven culture," he said.

(Additional reporting by Sinead Cruise; editing by Andrew Dobbie)

FILED UNDER: