On her admission to the business school, Shazia’s father gifted her a cute pink laptop stuffed with latest features. Unfortunately, the sparkle of her delightful eyes couldn’t even last a year as she realized that her friend Shaista purchased a better piece in almost the same price. She started hating her cute little lappy because of its obsolescence and felt an immediate need to purchase a better one. Same story holds true for our cell phones, TV sets, refrigerators and other consumer durables; the speed at which we are purchasing, using and disposing stuff is tremendously increasing. Remember the times when shoes used to be of only two types “Formal” and “Casual” and now go and have a look at the shoe cabinet of your wardrobe you will find footwear for every occasion and mood, like boots, loafers, brogues, running shoes, flip flops, sneakers, moccasins, wingtips, trekking shoes etc. What are the reasons behind this drastic change in consumption patterns? Is it only due to increase in earnings, lifestyle and living standards? Although these factors do play a significant role in influencing the consumption patterns but the way we are behaving in markets today has been designed or in other words we have been programmed to shop, shop and shop. The conditioning of our shopping behavior has its roots in history, when a bigger design of consumption driven economies was created in America by Victor Lebow right after World War II.
The economic cycle:
In theory the measure of a country’s national income, i.e., the Gross Domestic Product (GDP) is the sum of Consumption, Investments, government spending and Net Exports. The cycle starts with raw material extraction, processing in factories, producing finished goods, sale, consumption and disposal. The cycle provides opportunities for investments, creates jobs and in the process adds value to the country’s economic output and growth. A closer look at the above cycle clearly shows that it’s the engine of consumption that drives the whole cycle. For consumption driven economies in order to accelerate economic growth; acceleration in consumption is a must. Retailing analyst Victor Lebow articulated the solution for improving the sluggish American economy after WW II which has become the norm for the whole system. He said: “Our enormously productive economy . . . demands that we make consumption our way of life, that we convert the buying and use of goods into rituals, that we seek our spiritual satisfaction, our ego satisfaction, in consumption . . . we need things consumed, burned up, replaced and discarded at an ever-accelerating rate.”
Yes, that’s correct! The consumer goods companies make it a point that the consumption engine keeps on running and that will only be possible if we continuously keep on disposing stuff which will make way for new purchases. What makes us dispose products so fast? They use two effective tools i.e. planned obsolescence and perceived obsolescence. Planned obsolescence means they actually make stuff that is designed to be useless as quickly as possible so we will dump it and buy a new one. It’s obvious with stuff like plastic bags and coffee cups, but now it’s even big stuff: DVDs, cameras and even computers! The only thing they change in a computer is a processor and to be very honest I don’t find much of a difference in working on a P-IV computer at my office and a core I 5 processor at home. That’s how they con us!!!
Then there’s also “perceived obsolescence.” Now perceived obsolescence convinces us to throw away durables that are still perfectly useful. How do they do that? Well, they change the way the stuff looks so if you bought your stuff a couple of years ago, everyone can tell that your belongings are obsolete, since the way we demonstrate our value is by being up to date. Look what they did to WagonR in order to keep the consumption going-first flat tail lights, then huge head lights, again flat head lights, re-positioning the number plate and what not. Fashion is another prime example of this. Have you ever wondered why women’s shirt/ Kurta go from long one year to short the next, to long to short? It is not because there is some debate about which shirt length is the most stylish for women. It’s because wearing long shirt in a short-shirt-year shows everyone that you haven’t been up with the fashion street so you’re not as valuable as that short shirted person next to you. It’s to keep buying new shirts/ Kurtas. To hasten the process they provide us with huge web portals where we don’t even need to step out of our rooms and eventually to complete the disposal we have portal like OLX.com and Quicker.com. Advertisements and media in general, plays a big role in this. Almost 1000s of times a day, through TV, radio, emails, newspapers, hoardings and other communication channels we’re being told that our hair is wrong, our skin is wrong, clothes are wrong, our furniture is wrong, our cars are wrong – we are wrong, but it can all be made right if we just go shopping.
The accelerated consumption model make sense for economies with huge production facilities as the speed of consumption accelerates the growth in country’s economic output, job creation, investments etc (obviously at the cost of depleting natural resources and increasing average debt of population). When we talk of J&K, we are a consumption driven economy and when it comes to investments we prefer investing in unproductive assets like houses, lawns and cars. We have a very primitive industrial sector comprising of MSMEs with stagnant growth which mostly produce agrarian products & handicrafts. The consumer durables that we purchase are produced in some other state of India or somewhere in China, US or other European country. Therefore our (J&K’s) increased consumption patterns are only going to help the producer’s economy with a substantial margin and a fractional part to the consumer’s market. China has understood this economic model so well that today China has become a factory to the world. There is an immediate need to understand that we are not the producers and we cannot monkey American consumption model to accelerate the growth of J&K’s economy. We better shift our levers from being a consumption driven economy to an Investment driven economy.
“Shopping: The fine art of acquiring things you don’t need with money you don’t have.”