Luxury Goods Spending: A Guilt Trip We're Not Buying

There's a great British term, nonplused, which is how I felt upon reading a story in this morning's WSJ that claims "In the past year, the guilty pleasure of shopping has turned to plain old guilt [and] retail executives say it has become such an overriding emotion among shoppers since the economic crisis set in last year that it is delaying the recovery of the luxury-goods industry." The challenge is that "shoppers are suffering from 'luxury shame,' consulting group Bain & Co. said in a research report earlier this week."

Let me try to make sense of this: Consumers are feeling "guilty" about shopping for luxury goods and their "shame" is delaying a recovery in the luxury goods markets? How about the fact that unemployment is about to exceed 10% through 2010 and those fortunate enough to have pension funds and 401ks have seen their value halved over the past 18 months and that wise thinking -- along with astute rationale judgment -- is the more plausible explanation for this consumer cut back? Not guilt.

In a quasi-scientific attempt to further rationalize guilt causality The Journal reports that "Browsing and buying release a variety of emotions. Selecting clothes and trying them on produces a high. When shopping feels good, that's the dopamine in your brain, the same euphoria that eating chocolate can generate. But guilt sets in quickly. 'It's not very strong at the beginning but increases when you swipe your credit card through the credit-card reader,' says Mr. Lindstrom, who conducted three years of studies in neuromarketing -- hooking 2,000 people up to sensors to monitor the brain's response to ads and brands. Guilt flashes up in the prefrontal cortex ...”

I don't know how Mr. Lindstrom established that whatever "flashes up in the prefrontal cortex" is "guilt" vs. some other emotional response but that's beyond me. One Italian fashion spokesperson is quoted saying "Guilt is running so high these days that many people are simply not going into stores in order to avoid the temptation to buy ... Shoppers are steering clear of the usual shopping zones ..." The decision to not enter a store isn't an expression of guilt, it's perfectly logical if one chooses not to spend on the items contained within.

When producers and retailers conclude that their sales volumes are down not because their goods are discretionary and expensive in the biggest recessionary climate in memory, but because their target market feels guilty about buying them, they need a serious reality check if they hope to survive. Perhaps Mr. Lindstrom should hook up his sensors to people who are able to make deposits to their savings account to see what type of brainwave and hormonal sensations that generates -- now that would be newsworthy. But perhaps not as much as a luxury goods maker completely revamping its product design, procurement and supply chain practices to dramatically lower costs and bring new products to market at price points that not only assuage guilt, but more important, appeal to our rationale side as well. Hmmm. Smart Spend Management versus blaming consumer guilt. I know which idea I'd rather take to my shareholders ...

William Busch

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