small spenders: the final frontier

[Sara Noel]

http://www.smh.com.au/news/National/...?oneclick=true

[bamamomto4]

it wanted me to register..?

[Sara Noel]

http://www.smh.com.au/news/National/...028484718.html

Frugal consumers make up one of the last great unconquered markets. But not for long, reports Matt O'Sullivan.

When Alan Jones (not the radio jock) shops for clothes, the last place he goes to update his family's wardrobe is a department store.

Instead, he walks into a Salvation Army or St Vincent de Paul second-hand clothing shop. "I can buy decent clothing for $2 or $3 an item," he says.

It's not that he lacks disposable income. Jones, a scientist at the Australian Museum, and his wife, Peggy O'Donnell, also a scientist, earn well in excess of $100,000 between them.

In an effort to reduce their "ecological footprint", the couple and their two children - Rosie, 14, and Brendan, 11 - sprinkle bathwater on their garden in the northern Sydney suburb of Narraweena. They are thrifty "largely for environmental reasons, although I have to admit it does seem ridiculous to spend $70 or $80 on a pair of trousers", Jones says.

Some would call the Joneses penny pinchers. To Sarah Todd, a marketing professor from the University of Otago in Dunedin, New Zealand, they are "frugal consumers".

Margaret Craig-Lees, a professor from the University of NSW's school of marketing, calls them "voluntary simplifiers" - a term coined in 1936 by a former student of Mahatma Gandhi, Richard Gregg.
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"There is an active movement in people being concerned about what they are consuming," says Todd.

Besides the growing attention from academics, there are books (Buying Time and Getting by: The Voluntary Simplicity Movement and The Circle of Simplicity: Return to the Good Life) and websites (www.simpleliving.net) devoted to the "simple-living movement".

Why should frugal people appear in the midst of a materialistic age? No one is sure. Some regard frugality as a "trait" among the many that make up our personalities. Others regard it as a more encompassing human characteristic.

"Consumer frugality has recently started to attract attention, with suggestions that it needs to be understood as a lifestyle," write Todd and a colleague, Rob Lawson, in Towards an Understanding of Frugal Consumers, a paper published in the Australasian Marketing Journal in 2003.

Why bother researching frugality? Because early studies suggest frugal people don't fit the stereotype. Frugal people appear to be high-quality customers because, rather than splashing out on a whim, they save for specific - and often expensive - goals.

There are big rewards for marketers, such as Virgin's Richard Branson, who win over frugal customers. Branson is a leader in targeting emerging groups of product-wary consumers, says a Macquarie University marketing lecturer, Julian de Meyrick. In the cutthroat airline industry, Virgin made its pitch on cheaper fares and forced its competitors to follow suit. This opened air travel to people who'd never flown.

De Meyrick, a marketer with 25 years' experience working for companies including Bushells and American Express, also points to supermarket petrol discounting.

A four-cents-a-litre discount doesn't sound like much of a promotional pitch, but petrol sales - and a boost in checkout sales driven by the petrol-voucher system - has helped Woolworths increase revenue during a retail slowdown, the supermarket's boss, Roger Corbett, said this week.

Todd and Lawson say: "Marketers have responded to the apparent growth in people adopting a frugal lifestyle by encouraging consumers to buy what they really want [using slogans such as 'Reward yourself' and 'You're worth it']."

Marketers who figure out how to identify frugal people can save money on advertising and promotional campaigns. For instance, frugal people are unlikely to be "early adopters" of new technologies, so an ad for the latest mobile phone in Simple Living magazine would be a waste of money.

Working out why some people are frugal and others are spendthrifts is not easy. "For some people, it's a backlash against capitalism," says Todd. "It's not that they can't spend - it's that they are consciously choosing not to spend." This choice sets them apart from their frugal forebears.

For previous generations, frugality was the key to survival during lean times such as the Depression. Today's frugal consumers are likely to be highly educated, wealthy and "time rich". They will shop for the best buy, cook as much as they can and spend hours fixing equipment in their garden sheds. Their time-consuming habits partly explain why older people comprise a large proportion of the frugal tribe.

Attempts to measure frugality have focused on people's ability to restrain spending, and their resourcefulness in achieving longer-term goals.

Suzie Brown, 30, buys her food in bulk, avoids cosmetics and weighs up a product's impact on the environment and fair trade before she buys. On a $50,000-a-year salary as a campaigner for the Australian Conservation Foundation, Brown could indulge more in luxuries. "[But] I try not to buy things. It's really a choice - I could afford to have a car, I could spend more."

It is the Browns of this world who marketers are trying to reach. "It's not that they are not spending their money, but it's that they are spending their money more wisely," says Todd. "Product quality is important to them. If they do consume, it's very likely they will be prepared to spend more to get better quality."

Jones might buy schoolbooks for his daughter at a Vinnies shop, but he still likes "the odd decent red", buys season tickets to the theatre and flies his family to California every three years so his children can see their cousins.

Craig-Lees has studied voluntary simplifiers - people who spurn restaurants, overseas holidays and expensive cars in favour of simpler lifestyles. She believes these people are not saving to meet long-term goals.

Her research found voluntary simplifiers opt out of the rat-race to minimise their impact on the environment, to focus on a hobby or to shield their children from consumerism. "They wanted their children to have less to do with media [and] to grow up without being consumers," she says. "A lot of them had quite wealthy parents - they chose to live like this because they can."

They detest beauty products, limit their electricity and telephone use, and refuse to dip into their pockets for entertainment and holidays.

Voluntary simplifiers value education, however, and buy computers, books and games. "They would have all the gadgets [but] they were very mean with their clothes. They would buy one thing and wear it a lot," Craig-Lees says. "They would cut down on services [and] do as much as they could themselves."

Surprisingly, she found voluntary simplifiers do not reduce their overall spending. While they might not pay $110,000 for the latest BMW 5 Series, they are willing to spend thousands of dollars on solar-energy systems.

So what creates a penny pincher? "It's very much a social-conditioned thing and linked to social values," says Craig-Lees.

That conclusion rings true for Jones, who avoids excess packaging, seeks energy-efficient appliances and drives a nine-year-old Honda Civic that gets 100 kilometres per eight litres of petrol. His parents weren't "heavily into capitalism. They saved and reused things. I still hear my mother saying: 'Who's left those lights on?' " Now he finds himself asking his children the same question.

The New Zealand study concluded that humans are not born frugal. It is a "lifestyle construct", rather than a genetic characteristic.

For this reason, Todd believes frugality is cyclical. The 1950s heralded a period of high materialism, as people rewarded themselves after a period of deprivation during World War II.

The hippie culture interrupted this trend in the late 1960s, only for consumers to return to their extravagant ways in the 1980s. And again today, some consumers are responding to what they believe is excessive material pleasure.

In the past six months consumer spending has softened in Australia due to rising petrol prices and interest rates. However, the Commonwealth Bank's senior economist, John Peters, says it continues to grow on a year-on-year basis.

Consumer spending is crucial to the economy's health, as it makes up about 60 per cent of gross domestic product.

So far this financial year, growth in consumer spending is about 4 per cent, compared with 5.5 per cent last financial year. "Generally there's still a positive view on spending. It's just off the strong growth we saw a year or so ago," Peters says.

Because it's a new area of interest, researchers don't have sufficient data to compare countries' levels of frugality, though Todd expects greater thrift in societies where religion plays a large role.

Calvinism is one of many Western and Eastern religions, such as Catholicism and Buddhism, that teaches followers not to obsess over wealth or excessive consumption.

On the other hand, most religions do not view penny-pinching favourably, either, says Richard Campbell, an emeritus professor of philosophy at the Australian National University. "For any religion, the things of this world are not ultimate. There is a danger in frugality just as there is a danger in chasing wealth."

A Pentecostal churchgoer, Stephen Gore, 27, avoids big purchases and debt, and buys at factory outlets. He describes himself as "modestly frugal".

A student project co-ordinator at the University of NSW, he receives $570 a week in the hand - or $41,000 a year before tax - half of which he saves or gives to his church. "I think it was learnt - part of it, for me, seemed to be common sense. [But] I don't have friends who spend hundreds of dollars on alcohol." But, like many, he is willing to part with his cash on some items. "I'm a fan of gadgets if it's going to add efficiency and productivity to my life."

Whatever the reasons for frugality, Roger James, the president of the Australian Marketing Institute, says, there's "little doubt that consumers are becoming more savvy in their response to marketing propositions and more discerning in their buying behaviour. And if we are heading towards an economic slowdown, we're likely to see this trend magnified."

Marketers need only look at popular culture's challenge to the consumption ethos. The popularity of Morgan Spurlock's film Super Size Me captivated consumers unwilling to accept newer, faster and flashier products.

Todd says: "Big multinationals are taking notice. I think we will see more active consumers, rather than just passive ones. [But] you have to be very careful with the claims you make to take advantage. If you mislead them once, I don't think you would get a second chance."

[forestdale]

Thanks Sara. It's really interesting to see this article published in the Sydney Morning Herald - one of the country's biggest and most influential newspapers. There is hardly anything written on frugal living or simplicity in the maintstream press here - it's never on TV.