22 June, 2012

Have we hit saturation point?

Melbourne Herald Sun, Friday June 22, 2012

Manufacturers, retailers, economists and politicians, are all huddled and worried. What is happening with society - people have never been better off or more financially secure, yet the their behaviour is not reflecting this. Certainly not their buying behaviour.

America is painfully but positively recovering from the GFC, and in Europe the Dread of the Drachma does not have to be as terrifying as it is portrayed. But in any case, what has that to do with shoppers in Chadstone or drivers in Darlinghurst?

Yet everywhere we hear these tales of slowing desires. Sales are down, expectations are low. Life is especially painful for the department stores - and we all know the empty-shop gaps in our high streets.

The politicians and commentators have a field day throwing blame around, usually at each other. It's the financial crisis; it's the carbon tax; it's the internet; it's the cost of housing that's too high for the homeless and too low for the sellers.

But there's something no-one talks about. What happens when everybody has got everything that they want? The thought struck me when my favourite men's shop had yet another sale and some particularly fine, expensive shirts were suddenly within my price range.

As my hand reached out I stopped. I recalled two shirts from this shop bought a couple of months ago and still in their plastic wrapping. Did I really need two more shirts? As I picked through my wardrobe in my mind, I realised that I also had enough trousers, jackets, and more shoes than would fit on the racks. I had reached saturation point.

Of course men have the advantage of less demanding fashion turnover. But even with girls, I wonder how many of you, over the past month, have unpacked your winter trunks and discovered skirts and slacks and jackets you'd completely forgotten about. They're as good as new, only worn a few times last winter, and finding them again felt like a new shopping expedition.

As we look at the goods that fill our lives, there aren't many that wear out and have to be tossed. Perhaps it's time to replace the TV you bought 10 years ago with a new huge flat 3D monster to transform your living room. But the washing machine still works fine and so does the fridge.

So how do you market around saturation? Motor companies have followed the money. Their booming sales are up 10 per cent in WA and 7.5 in Queensland. But in Tasmania they've fallen by 12.3, and are flat in Victoria and NSW around four percent. Of course it's very easy to spend a bit on mechanics and push your car for another year or two of service.

Fortunately we all have to eat, much to the relief of supermarkets and restaurants. Here though the marketing trick is adjusting how much is spent on each visit. The past decade has seen the decline of many of our fine food establishments. We may see more arise in the future. And all those TV competitions have revived an interest in cooking.
In fact the future does look promising if you ignore the doomsayers. Mortgage repayments are down; the carbon tax sweeteners will soon drop into people's paypackets; children's school and welfare grants will increase; and this year's inflation rate of 1.6 per cent ensures costs will remain stable.

So there is no reason for you to not feel confident and well-off. The only trouble is, once you go out to shop - is there anything you really need, and when you get it home, where will you put it?

ray@ebeatty.com