I checked my jean’s pocket thrice this morning for a wringled piece of paper, something I wouldn’t have done a couple of years earlier unless it was important. Nothing surprising- It was a coupon from Dunkin Donuts and as I write this, I am having coffee and a multigrain bagel for a great combo rate of $2.50. The average American Joe is making a comeback and his actions will be a greater threat to India and China in coming years.
According to Paul Leinberger, SVP, Global Accounts at The Futures Company who I met after a talk in Phoenix recently, the era of consumers living beyonds their means is dead in America. What we are seeing is a return of the average American who really wants to live within his or her means. I emphasize really because the decade of a “want” economy (1990-2000) is slowly shifting to an era of a “need” economy. A scan of consumer confidence indexes are a testimony to where the average American is shifting his or her priorities.
Interestingly, Paul has a great formula to describe how American consumers are becoming more responsible, frugal and counting coupons like me. Here is his magical formula: V=RSVP + N. Here, V stands for value as that’s what Americans want most these days. R stands for responsibility, S stands for smart, V stands for vigilant, P stands for Prioritization, and N for networks. Think about this formula for a second and if you are an average Joe trying to buy a television set, for example:
- You will try to get the maximum value (V) for your money
- You will be responsible ( R) the sense you will think several times before making that plunge to buy that high value item
- You will make smart (S) purchasing decision, meaning you will do a lot of comparison shopping
- You will do quite a bit of prioritization (P)- Is this my priority now?
- You will seek resources from your networks (N), propelled mostly by social media and other areas of communication
So, will you settle for a high end Sony or a Vizio? It’s a question that most American consumers are trying to answer as they make the shift towards finding value. In 2007, average Americans ate out four times a week. By mid-2009, this fell drastically forcing the closure of several restaurants. MacDonalds saw it coming and went on to revisit their business model. Those who didn’t, for example, Long John Silvers are now shutting doors. The hunt for value was most evident last Christmas as hordes of customers searched for value through comparison shopping, barcode scanning and other technology.
The root cause for this is simple: the average Joe is angry at corporate America even as corporate America is flush with cash- richest since 1929 in terms of accumulated cash. The average Joe’s anger i salso directed towards big banks blamed for the home collapse and greedy oil companies like BP and their cold responses to serious mistakes. This distrust is slowly making him shift from consumption of branded goods to store name products.
So, I asked Paul about his formula and how the Indian and Chinese economies are reacting to a new kind of marketplace in the U.S. Paul visits India six times a year, has done business in the coastal state of Kerala where I am from and he said what’s happening there and also in countries like Vietnam is what had already occurred in the U.S. in the eighties and nineties.
So, when is the bust coming? He didn’t have a definitive date, but I know it will come some day.
My theory is this. As more and more Americans aspire to be the average Joe’s, consumption of branded goods and high end franchise models will possibly see a decline in the United States. This could also have a ripple effect in the booming economies of India and China. Perhaps, the average Joe is an innovator- creating a uniquely American marketplace to fight against the injustices of corporate America and possibly globalization.
Anyhow, it’s a great time to be an average American Joe. And, truly great to enjoy a store brand coffee on a coupon.