Children of the credit revolution
By Samantha Pearson
Published: July 8 2009 22:43 | Last updated: July 8 2009 22:43
Andy Slater, a 22-year-old delivery driver in London, appears oblivious to the fact that the UK is suffering its worst recession since the second world war.
“You gotta have new trainers ain’t you? Nike, Adidas, Lacoste – whatever looks good,” he says, eyeing up the latest models in the Westfield shopping mall in west London.
He is not alone in his opinion. In a survey conducted by the US-based Westfield group in May, 70 per cent of its shoppers aged between 18 and 35 said they were spending the same or more on clothes and eating out.
Slaves to fashion and free of most financial commitments, young people have kept spending in economic downturns when others have cut back. But today’s younger generation is particularly flush with cash and, after growing up during the credit boom, spending is deeply ingrained.
As a result, retailers geared towards the youth market – particularly clothing chains – have been basking in their good fortune.
Fashion retailers JD Sports, New Look and Primark all reported double-digit sales growth this year and the internet-based Asos doubled its profits to £14.1m ($22.6m, €16.3m) in the year to March. In the US, Hot Topic, which sells music merchandise to teenagers, reported a 19 per cent increase in fourth-quarter profits and Buckle, another youth-focused fashion chain, has recorded double-digit monthly sales growth over the past year.
TNS, the consumer research group, says that while under-35s spend 30 per cent of their total clothing budget on discounted items, all other age categories spend 35 per cent.
Why young Brits love spending on fashion
It’s official: young adults in Britain are among the most fashion-obsessed in the world. JWT, the US-based advertising agency, asked 18- to 29-year-olds in the UK, the US, Brazil, Canada and Australia which items they would never cut back on, no matter how bad their finances were. Brits ranked “buying new clothes” as fourth on the list – higher than any other country in the poll. Above that, they prioritised the internet, mobile phones and satellite television. While young people in the US also said they could not do without home entertainment, they ranked alcohol consumption as the fifth most cherished area of spending. Brits put boozing at only 16 on their list.
The Canadians and Australians favoured going out to see movies and sports events while half of Brazilians said paying for college was their most important outgoing.
All nationalities agreed they could probably do without magazine subscriptions, taxis and paying to download music.
In an effort to ingratiate itself with its most lucrative customers, Westfield’s London shopping centre is planning an indoor summer festival, including indie punk bands and Nintendo Wiis. Even Liberty – more often known as purveyor of paisley patterns to the middle-aged – is having a go. The luxury department store has teamed up with Nike to create a range of vintage floral basketball shoes and roped in Kate Moss and Topshop to design dresses.
“We had to refresh and bring in a new crowd,” says Geoffroy de La Bourdonnaye, Liberty’s chief executive. “The youth don’t like arrogance or stiffness.”
One explanation for young people’s increased spending power may be that they are living with their parents for longer or choosing to rent rather than buy.
“If you don’t have a mortgage, you’re not going to be so worried about losing your job,” says Andrew Wade, a retail analyst at Numis investment bank. It is fear of unemployment, rather than unemployment itself, that stops people spending and encourages them to save more, he says.
For the British, growing up during 16 years of uninterrupted economic growth has also had an effect, by giving the young an “innate sense of entitlement”, according to JWT, the US-based advertising agency.
“If you see something that you like, then you’re going to get it, yeah?” says student Sattar Mozafari as he walks out of the Westfield outlet of HMV, the entertainment chain, computer game in hand.
You no longer need to be born with a silver spoon in your mouth to get what you want: a credit card in the back pocket will do.
This generation has grown up watching back-to-back adverts for unsecured loans, learnt the art of financial leverage before tea-time thanks to television programmes such as Property Ladder, and is used to being offered store cards every time they get to the check-out.
The credit-boom babies are programmed to buy, buy, buy and it seems the credit crunch may not be enough to break the habit. In fact, credit card spending has risen every month since the start of this year, according to figures from the UK Card Association, and is down less than 3 per cent from 2008.
But, above all, young people’s determination to keep spending comes down to the simple fact that consumerism is cool.
In 2003, “bling-bling” earned a place in the Oxford English Dictionary, defining an era of popular culture based on unashamed materialism.
While past youth movements – from hippies to ravers – rejected capitalist consumerism, the urban music scene made ostentatious signs of wealth not only acceptable but highly desirable.
Cash is for flashing, gold is for hanging around your neck and, in the words of New York rapper 50 Cent, life is there to “get rich or die tryin’”.
However, just as retailers are trying to court this market by learning how to get down with the kids, there are some signs that young shoppers are beginning to change their ways.
Last week, Nick Robertson, Asos’s chief executive, was surprisingly gloomy for a man who had just seen his company’s profits double.
“Young people are going to come under pressure too and, if you ask me what my health-check on retail over the next 12 months is, well, I’m saying it’s not good. I don’t see any green shoots at all.”
Certainly, the dire outlook for youth unemployment will test the resolve of the most blasé of spenders and young people may soon be forced at last to tighten their belts – even if does mean covering up those Calvin Klein boxer shorts.
Employment agency Reed says: “For students looking for summer work this year, it’s almost impossible for them to find anything. They’re competing against people who have been made redundant who are already quite experienced.”
The “bling culture” may also be losing its sparkle as anti-globalist sentiment gains momentum in the recession. The G20 protests in March and the bubbling resentment over bankers suggest brazen affluence is already something to be coy about or even ashamed of and the “green” movement may soon put a damper on “consumer chic”.
Rupa Huq, a lecturer on cultural studies at London’s Kingston University, says: “Youth culture today is crucially plural. While there is the bling generation present, who attach importance to labels culture and conspicuous consumption, the past 10-15 years has also seen the development of an anti-consumerist movement which has the potential to be huge in recessionary times.”
Copyright The Financial Times Limited 2009
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