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The Upside: Era of New Frugality?

My Granddaddy Mitchell was a ‘Depression Man’ if there ever was one. He did not like to spend money. Ever. The term ‘eating out’ was not in his vocabulary. Nor was the word ‘vacation’. Each year at Christmas, he gave my sister and me a leather bag containing greasy-feeling pennies and nickels collected over a year’s time. His philosophy: you worked and you saved. Period. Granddaddy always seemed a little extreme, but today, his thrifty ways are back in style.

The Great Recession has given birth to a long-term trend of more disciplined and discerning shoppers, according to a new survey by Booz & Company. The study shows that frugality is “becoming entrenched consumer behavior that is reshaping consumption patterns in ways that will persist even as the economy rebounds.” Spending on beauty products is down, along with clothes, shoes, household products, and mobile phone service. Booz found that shoppers are less impulsive, do more research, and are more likely to clip coupons.

“Frugal behavior is now considered trendy,” said Matt Egol, a Booz & Company Partner.  His colleague Andrew Clyde added that “this more cautious consumer approach to spending began even before the recession came into full swing but has since picked up speed.” Clyde further observed that “as the economy recovers, marketers need to better target their strategies to preserve the value of existing brands, and avoid destroying value through too blunt a competitive response across segments.”

A new survey by the Associated Press echoes the Booz report, showing that the Great American Spending Spree may finally be over. Sean Snaith, an economics professor at the University of Central Florida, calls the trend a “mini-age of austerity,” while economist Jeff Thredgold, of Thredgold Economic Associates says that the near future holds a “less impress-my-neighbor-type spending.”

In a piece in the Chicago Tribune, a Duke professor expressed his new-found reluctance to open up his wallet, despite his financial security: “I have tenure, and, unless I do something illegal, no one is going to fire me.” But, he acknowledges, “I don’t feel comfortable spending money on things because of the recession.”

But not everyone is reusing coffee grounds. The wealthy, you’ll be glad to know, are happily burning up their credit cards at stores like Nordstrom’s, where the revenue in stores open at least one year shot up 16.8 percent last month. Overall, luxury sales were up 15.2% in February. Apparently all those Wall Street bonuses are coming in handy at the cash register.

But for the rest of us, here’s a nifty list of “49 Frugal Habits Everyone Ought to Know.” My favorite is #37: “Use a condom at all times. It’s a 50 cent solution to not have more kids than you can afford and ensuring your family a better quality of life.”