TIME: Almanac 1995

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<text id=90TT1932> <title> July 23, 1990: Hunkering Down </title> <history> TIME--The Weekly Newsmagazine--1990 July 23, 1990 The Palestinians </history> <article> <source>Time Magazine</source> <hdr> BUSINESS, Page 56 Hunkering Down </hdr> <body> After the glitzy '80s, cheaper and careful are back in style By Janice Castro--Reported by David M. Gross/New York and Rosanne Spector/Washington Suddenly, it is fashionable to pinch pennies. Washington socialites Frank and Jayne Ikard are not taking their annual grand tour of Italy this year. Instead they plan to drop in on friends in Montana. Beverly Hills matron Joan Gross last week was browsing at the Price Club, a discount warehouse in nearby Inglewood, alongside an Asian restaurateur shopping for kitchen supplies and a Hispanic family buying low-price food in bulk. Said Gross: "Conspicuous consumption is out." The mad, impetuous '80s are over. The shop-till-you-drop gilded decade of excess, Rolex, baby millionaires and their legions of wannabes has given way to a new age of moderation and caution. Dynasty, meet Roseanne. In its June survey, the Conference Board, which every month measures consumer confidence across the U.S., found people more worried than at any time since 1987. The economic shock therapy that began with the Crash of '87 and continues with the $500 billion savings and loan debacle has given Americans a new appreciation of limits. Sobered by the sight of beleaguered billionaires and the collapse of corporate empires strung out on debt, U.S. consumers are hunkering down. They are borrowing less, shopping carefully and saving more. During the first six months of 1990, according to the Department of Commerce, consumer spending growth was flat. At the same time, consumer debt rose at an annual rate of only 3%, down from 7.6% in 1989 and 8.5% in 1988. Edward Hyman, chief economist at C.J. Lawrence, Morgan Granfel, a Manhattan brokerage firm, predicts a virtual standstill in consumer borrowing for the next 12 months, a phenomenon not seen since the 1950s. At the same time, socking away money is regaining popularity. In April the personal savings rate topped 6% for the first time in more than five years. At privately held Montgomery Ward (1989 sales: $5 billion), chairman Bernard Brennan sees the new consumer caution in the declining sales of such big-ticket items as appliances and furniture, usually two of his company's strongest categories. Says he: "People are beginning to worry. They are reading more today about factory layoffs and companies failing because of the debt restructuring of the '80s. There's a great deal of unrest out there about job security and even levels of pay." Generally, though, the mood is not so much one of abject fear as a mixture of resignation and relief. Resignation to diminished expectations, for one thing. The children of the large baby-boom generation are reaching their expensive teenage years, and college costs loom. Something's got to give. Many consumers also feel a back-to-basics sense of relief now that '80s icons like the Santa Fe look, sun-dried tomatoes and goat-cheese pizza have seen their day. Such ordinary pleasures as gardening, milk shakes and fried chicken and mashed potatoes are acceptable once more. Exclusive name brands no longer carry the same cachet or inspire the same hell-bent-for-leather efforts to pay for them, because nobody really expects anyone to be impressed. Says Martin Puris, chief executive of the Ammirati & Puris advertising agency in Manhattan: "The trend is pragmatism." Dropping thousands at a Ralph Lauren boutique has suddenly become excessive with the end of the era of the borrowed life-style. In fancy restaurants, fighting for the check has given way to fighting about the check. Says Denver developer Peter Janopaul: "Even in the better nightclubs, people are figuring their share of the check down to the penny. They're not embarrassed to do so--they're proud of it!" Similarly, buying top-price imports no longer seems so smart. Many U.S. products have regained their reputation for quality and value. U.S. sales of Porsches fell 69% from 1986 to 1989, from 30,471 to 9,479, though they recovered 19% during the first five months of this year. BMW's U.S. sales dropped 33% from 1986 to 1989, from 96,759 to 64,881 cars, and slipped an additional 10% in the first five months of this year. Buying bargain imports, though, is smart, very smart. In Elizabeth, N.J., the grand opening of IKEA's 6.2-acre furniture store in May created nightmarish gridlock usually seen only for the nearby Giants football games. More than 25,000 eager shoppers heading for the Swedish-owned store jammed the New Jersey Turnpike, and 200 others camped in the parking lot overnight to get first crack at the firm's $39 bookcases, $7 rag rugs, $98 pine beds and other basic furnishings. Parents could drop off their children in a play area supervised by store employees before turning to serious shopping. A lunch counter served plates of Swedish meatballs and boiled potatoes (price: $3). Old habits, of course, die hard. Even bargain hunters can get carried away when confronted with tempting prices. And many shoppers still rationalize luxury purchases as investments. In Santa Monica, Calif., the local Lexus dealer cannot keep the $40,000 Toyota sedans in stock. Customers say the car is worth much more than its sticker price. Posh shops on Rodeo Drive in Beverly Hills continue to be packed. But the days of wretched excess have passed for most consumers. Some of the same folks who dropped expensive brand names like credentials last year are impressing their friends by rattling off discount outlets and off-price brands. Even the rich and famous are not above looking for a bargain. Elysa Lazar publishes the S&B Report, a monthly compendium of up to 250 designer showroom sales where, on certain days, customers can buy overstock fashions from Donna Karan, Perry Ellis, Oscar de la Renta and other top designers for 50% off. Well-heeled subscribers include Dr. Joyce Brothers, Regis Philbin and Sally Jessy Raphael. After Joan Lunden mentioned Lazar's new mail-order catalog on Good Morning America two months ago, 80,000 viewers wrote to request the guide to discount suppliers of everything from wallpaper and pet food to boating equipment and books. Bubbles the publisher: "There is a movement growing in the country, a mini-revolution. Consumers are putting their feet down and refusing to pay high prices." Things have gone so far that getting your home featured in Architectural Digest, an honor to die for in the '80s, is considered tacky. After all, most of the homes are not so much designed as crammed with very expensive clutter. Interior decorators are outre, and making slipcovers and clothes for the children seems to be gaining favor. Fabri-Centers of America, a chain of 620 fabric stores in 35 states, reports that earnings have grown 72% in the past year, from $5.1 million to $8.8 million, while revenues are up 15%, to $333 million. Chairman Alan Rosskamm attributes his company's new growth to a renewed interest in puttering around the house and making things from scratch. Sales at K mart were up 16%, to $7 billion, during the first quarter. Consumers fed up with $100-plus price tags for top-drawer Nike Air Jordans or Reebok Pumps are turning back to $25 plain canvas Keds, the reliable old workhorse of the athletic-shoe industry. Keds sales rose from $150 million in 1988 to $200 million in 1989, and are expected to top $230 million this year, at a time when most companies' sales are slowing. While busy Americans are eating almost as many meals out as ever, they are hunting harder for bargains. Surveying restaurant-dining patterns across the country between December and February, the NPD Group, a Port Washington, N.Y., market research firm, reported that ethnic and quick-service outlets fared best. Some top eateries have shaved prices 10% to 20% to keep their kitchens busy. Many popular night spots that would have shunned families two or three years ago have added children's plates and have hung out the welcome sign. At home, catered dinners have largely been replaced by casual cookouts. Is the new consumer caution bad for the U.S. economy? In the long run, a renewed emphasis on savings, and a preference for products that work over those that impress can only be healthy. If U.S. manufacturers and service firms find that they must offer greater value to win customers at home, they will be learning lessons that should improve their chances of doing business abroad. Frenetic consumers who spent much of the decade trying to have it all and wondering how to deal with the resulting stress may find unexpected serenity in their backyards. A touch of the tightwad is a much needed correction after the excesses of the '80s. </body> </article> </text>