Our executive chairman, Walker Smith, talked recently about the way in which consumer behaviour and aspirations are changing, in a session at America’s Urban Land Institute. The conversation, with the ULI’s Global CEO Patrick L. Phillips moderating, was reported in its magazine. Here are some extracts:
“Consumers are not limiting their lifestyles or downsizing their dreams, but they want to live in a different way, without all the heavy baggage they’ve carried around,” Smith said. “They do not want the mental or physical weight of dealing with stuff they buy, need space for, and have to maintain and store. Our phrase for describing this is ‘Live large. Carry little.’ This is the idea that aspirations remain big but have become more disciplined. As Smith explained, this relates to consumer ownership, not spending. “People want to spend, but the question is: Do they want to spend to own?”
“Digital technology, social connectedness, and living arrangements that we see people adopting” are fundamentally changing how people want to participate in the marketplace, he said. The biggest factor is digital technology, which is “shaping people’s engagement with one another, so it has a direct impact with social connectedness and, in turn, living arrangements.” By 2020, Smith said, it is likely that 6 billion smartphones will be in use: “For the first time in history, every person on the planet will have access to the very same technology.”
Walker compared changes in average household spending from 2006 through 2013: In the US people spent less on non-necessities like food away-from-home, vehicle purchases, entertainment tickets, furniture, apparel, and mortgages; and more on necessities like health care, rent, education and foot at-home. They also spent more on their phone services, making this the newest necessity.
Digital technology has led to a “shuffling of first priorities,” he said, as well as greater ability to rent or share homes, easy access to free or cheaper stuff, and the ability to get everything on demand. In 2013, only 11 percent of survey respondents said that having a large, expensive home indicated success and accomplishment, compared with 25 percent in 1995. Digital technology has inspired a rethinking of how much storage, parking, utility, bonus, and workspace people need, he said.
This new mind-set about materialism is veering away from owning things and toward a ‘kinship economy,’ with relationships having the highest value, a trend reflected in things as varied as social networks, dating sites, farmers’ markets, food carts, cafes and coffee shops, and the sharing economy for transportation and housing. In the kinship economy, “brands have to be in the job of fostering social currency,” Smith said. The growth of dense and diverse center cities, or “centers of consumption,” reflects people’s attraction to being in active and social places such as the new outdoor community attractions like the Atlanta Beltline or the New York High Line. Lively urban places, along with online social networks, fit into the trend of “having more relationships as the central benefit in a marketplace driven by social connections.”