Little Luxuries

Spending in a recession, for those who have any ability to do so, seems to be a process of prioritization and an instinct that feels more like an evening with a big fork indulging in comfort food. Children always should and generally do come first, and combining being with children and sharing the experience with a parent is an easy explanation why Hollywood is having such success with its family entertainment (not children’s fare, but what we call “age 8 to 80” films). Ladle in imagery, moments and storylines that make adults cry or laugh, and you get Up, Harry Potter, Pirates of the Caribbean, Toy Story and Despicable Me. After all, in Despicable Me, an animated film from Universal Pictures, was the image of the Bank of Evil with the caption “Formerly Known as Lehman Bros.” ever intended for a child? In 2010, eight of the top ten U.S. box office films (and the actual top four films) in release in the United States fit this 8-80 paradigm. While box office maybe flat for most titles, this category is doing quite well, thank you.

In shopping, where perhaps we aren’t getting that new car or buying the next level house or moving to a better apartment – where big tickets items, particularly those with continuing payments attached, remain only dreams – the thought of a little luxury seems to replace an otherwise insatiable craving to buy. That U.S. credit card debt is creeping back up to unsustainable levels of borrowing (hey, banks aren’t lending, so use the credit card!) is a sign that folks are spending in little ways that are beginning to aggregate into a bigger push within the economy… not enough to turn the tide, but enough to confuse the best economists as to whether or not this recession is double-dipping.

Stopping by for a sinful Baskin Robbins ice cream cone or a sumptuous Starbucks blended mocha fall into this category, but discount sites with luxury brands are barely able to keep up with demand. “[Recently], a crush of shoppers hoping to buy a cheaper line of [Italian clothing designer] Missoni fashions at Target brought down the retailer’s Web site for the better part of a day… ‘When the crisis hit and people really started to feel a pinch in their pocketbooks, they started to spend less across the board, especially in discretionary kinds of things,’ said Vicki G. Morwitz, a professor of marketing at the Stern School of Business at New York University. ‘But it’s difficult, I think, for people to do that for a long time, even when they need to.’” New York Times, September 23^rd.

Consumers have already stocked up on basics “just in case,” and pent-up frustration is moving the buying needle: “Consumers at all income levels have been splurging on indulgences while paring many humdrum household expenses, according to industry data for the last year. Many retailers also report that while fripperies like purses and perfumes are best sellers, they cannot get shoppers interested in basics like diapers, socks and vacuum bags… Consumer psychologists say that in this uncertain economy — coming after one of the worst recessions in generations — it is just too hard being good all the time.

“‘People have a limited supply of energy to put toward controlling their urges,’ Kathleen D. Vohs, a professor of marketing at the University of Minnesota, said in an e-mail. Ms. Vohs studies spending behavior at the university’s Carlson School of Management… Many of the products selling briskly are not high-priced, but they could be on a party supply list: premixed cocktails and coolers, cheesecake, cosmetics and wine. Meanwhile, sales of staples like batteries, bleach and fertilizer have declined sharply.” NY Times. Meanwhile, the mega-rich have set aside any semblance of feigned frugality, and products from Channel and Louis Vuitton and BMWs, Porsches and Bentleys are selling like hotcakes. Wouldn’t it be strange if these irresistible shopping urges saved our economy?

I’m Peter Dekom, and I feeling like a nice slice of cheesecake flown in from New York right now.