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04.01.2009

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Why are consumers flocking to private label products in record numbers? Is the current economic crisis the stimulus behind the surge in apparent popularity? Can private label thrive without name brands?

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For more Hartman Group articles on the economy and luxury consumption, click here...

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03.15.2004 Rethinking Our Understanding Of Luxury Consumption

04.05.2004 Authenticity As An Antidote To Our Moral Ambivalence With Luxury Consumption

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Ugg! Kids Demanding (Luxury?) Happiness

Every generation has its uniform: A standardized dress-code that sets the cultural trend. Often these uniforms are comprised of high priced items; in the 1970’s it was Frye boots or Izod shirts and in the 1980’s it was Girbaud jeans. If you’ve walked through almost any mall lately, you’ve probably noticed the latest trend of women, teens and even young girls clomping around in Ugg boots. If fashion aware, you might say, "oh Uggs, those are so yesterday," but tell it to the tweens and teens! Once reserved for the jet set Vale crowd — with an average pair of comfy boots commanding a price of $100 skyward — parents across the nation have their own personal battle stories of the begging, pleading, wheeling and dealing occurring in their households, all for the sake of Uggs.

Don’t these kids know anything about the strained economy?

While it's always fascinating to witness the cultural artifacts of status in each generation it's almost more fascinating to see how families work out demand for items typically just out of reach of tweens and teens, who as many have learned, wield considerable economic clout and influence in their households. And while often labeled “trading up” or “luxury consumption” the quest for premium is much more about pursuit of pleasure, happiness and entertainment. For kids, it’s a simple equation: Fitting In = Happiness x (pleasure + entertainment).

Ugg Satisfaction: Like Fingernails on a Chalkboard

Even in a recession, demand for Ugg boots has filtered down to even the youngest girls and has set the stage for interesting household dynamics as tweens nag and negotiate for trendy status emblems. We recently met a Seattle consumer who said she was well-versed in the song and dance routine her children were capable of when they wanted to put the pressure on her to purchase something:

“Sometimes I have to give in just so I don’t have to listen to them talk nonstop about having something,” she said. “It’s like hearing nonstop fingernails scratching a chalkboard. You get to a point where you’ll do anything to make it stop.”

This consumer’s daughter eventually settled for imitation Uggs despite her attempts to convince her mother to buy the real deal. The daughter’s reasoning behind her need for Uggs: “All the girls are wearing them.”

In a household across the country in Boston, another consumer talked about a long internal debate with a 9-year-old daughter negotiating for Uggs, which culminated in the signing of a contract. The initial negotiation period lasted for weeks as individual classmates were identified as owning Uggs. The parents agreed they would buy her a pair of Ugg boots if she agreed to no clothing purchases for two months and, perhaps most importantly, no sulking.

What the Ugg?

Uggs made their first big splash on beaches across America in the 1970’s. The boots were a hit because they were simple: surfers could slip them on after a day of riding the waves, tromp through the sand and walk home. In 2000, Uggs made new waves in Nordstrom stores before receiving a big Kahuna type endorsement from Oprah Winfrey. More celebrity endorsements ensued and it wasn’t long before an obscure luxury item was a fashion staple in the wardrobes of millions of Americans.

Ugg Australia (owned by Deckers Outdoor) is thriving, as some retailers struggle to keep Uggs stocked on their shelves. Today, the boots appear to be more than a comfortable fashion staple — they just might be recession proof. In a recent Seattle Times article, the Ugg brand spokesperson said sales were not down due to the economy. Part of her reasoning: recession or not, people need to keep their feet warm. Well, we’d also say a lot of tweens, teens and young women also need to stay in step with fashion!

Bottom Line According to Uggs

Some brands hope to become cultural icons, bought and sought after by frantic parents in Cabbage Patch-doll-fired frenzies, earning great margins on exclusivity and riding the waves of fad. Interestingly, even in times of difficulty, nothing seems to diminish demand for those experiences perceived as fashionable or premium — especially when parents are led to the negotiation table by children really seeking happiness. While such behavior is often labeled as “luxury consumption” we believe there are much stronger emotions at play: For the past thirty odd years, consumers have been spending as a means of entertaining themselves. They do not see this as luxurious or trading up. When money tightens, so does their spending in certain categories.

Yet, what hasn’t gone away is the impulse to consume for pleasure and entertainment — for both children and adults. Thus our hypothesis is that we will still witness plenty of seemingly irrational spending in the present and — should the economy ever recover — expect to see plenty more. Families negotiate in countless ways, with the end result being frayed nerves but children happily "belonging" and, importantly, wearing boots that are apparently quite comfortable.

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Happiness not Luxury

Analysts and pundits constantly make the mistake of assuming “luxury consumption” “trading up” or “trading down” are consumer behaviors. In the United States, from the consumer perspective, luxury consumption is against the (cultural) law. Luxury consumption and trading up (or down) never happen from the consumer’s perspective. In other words, nobody willingly engages in luxury consumption or trading up. Those are terms crafted by analysts who purport to explain why consumers do the strange things they do.

What consumers do engage in is all matter of crazy rationalizations and justifications for their unnecessary (and what analysts would term luxury) purchases. Thus millions of us convinced ourselves that we might someday need the power of massive Range Rovers or SUV’s to navigate our daily commute to work—or that we need to spend $100 on children’s shoes. In all of this, we surely convinced ourselves of the product’s utility. We also mumbled something vague about safety or quality. Likewise, we may have thought to ourselves that we were rewarding ourselves, or treating ourselves, but most importantly we were not spending luxuriously. Outside of a very small subset of fashion conscious folk, conspicuous consumption has never been practiced.