There is a kind of confusion that happens anytime there is a major historical conjuncture where histories of failure and crisis which have independent roots happen to coincide. Because they coincide, they become part of the same “event”, and by becoming part of it, they genuinely aggravate each other and create an accelerating feedback loop of disaster and collapse. Once that happens, you don’t have the luxury to pick apart those separate histories and imagine how they might be resolved in their own terms any longer. But somehow it seems important to me to remember when there is a massive collision of three or four trains that they came from different places and were originally heading towards different destinations.
Looking at the current economic global economic crisis with this in mind, while the drop in consumer confidence and its impact on consumer spending is now firmly fused to the massive failure of the financial system, I think it’s important to keep in mind that some of the foundations of mass consumption in the U.S. were already showing serious strains well before the public heard about subprime mortgages.
Here I’m not merely referring to levels of credit card debt or the use of home equity to fuel consumption. I think the entire dominant architecture of retail consumption that took shape in the 1990s would have been in some degree of crisis by the end of the 2000s no matter what. Looking back, it’s going to be hard for future economic or cultural historians not to lump in the failure of stores like Circuit City or KB Toys with the Millennial Depression or whatever it is that we’re going to end up calling this whole event, but I actually think many of the retail failures reported in the last six months might have been coming no matter what.
Some of the issues that I think were already visible by 2000 among North American retailers:
1) Saturation of retail outlets. It isn’t just Starbucks: I think we had hit a point in the early 2000s where most communities simply didn’t need any new retail. But much as in the residential market, there were a lot of developers and construction firms that were built around the constant addition of new units, often without taking older retail out of the picture.
2) Saturation of product. Here I’ll agree with my colleague Barry Schwartz and many other critics of contemporary consumer culture: too much choice on store shelves, too much informational noise in the system, too many options and too much duplication, from cheap non-durables all the way up to big-ticket durables.
3) Failure to adapt to the affordances of online shopping. Not just too much choice, too much of it a false choice. Too many shell-games going on where manufacturers bought up shelf space in large brick-and-mortar stores and filled it with variant forms of the same product while those same stores failed to keep deep back catalogs of goods or to stock “long tail” items that might make shopping at that store a real destination experience. Back when a store like Borders first appeared, before Amazon, it was a place you’d drive to just for the depth and variety of their catalog. I remember taking a special trip to the one that opened near DC precisely because it had so many books across so many categories. I freely concede that brick-and-mortar stores now, whatever their size, can’t compete with Amazon’s catalog. But most of them have completely given up entirely on having a selection that goes beyond the last six months of product. This leaves those stores with an increasingly small customer base if they’re selling in communities with substantial online access: they’re selling to the people who can’t shop online, who won’t shop online, or they’re selling to people for impulse purchases of the latest merchandise where there is some value to physical presence or some special attraction to immediacy. (The latest Harry Potter, the newest DVD). Add to this that a great many big retailers still do not seem to recognize that many consumers now use the Internet to do price comparisons. I’ve heard informally from people that some of the chains liquidating in the last six months have taken product off the shelf, marked it *up* by 50% or 100% and then marked it down again to the price it was selling at before the announcement of closure. Yes, this is an old trick, but honestly, it works much more poorly in an environment where price comparisons are easier to come by.
4) Blind acceptance of the Wal-Mart model: squeeze the suppliers, reduce the quality, reduce the price, and hire a poorly-motivated minimum wage labor force to man the cash registers. Maybe this works for Wal-Mart, at least when it is going into retail spaces where the main competition are sleepy small-town Main Street retailers with small inventories at high prices. It doesn’t work in areas saturated with suburban retail clusters and malls. It clearly didn’t work as a model for a store like Circuit City and I don’t think it’s working for other retailers like Home Depot, Best Buy, and so on. Most of these bigger outlets and chains are now vigorously unpleasant places to shop in, pretty much the opposite of the spectactorial grandeur of mass consumption at the end of the 19th Century. Workers in these stores often know almost nothing about the merchandise they sell and have almost no desire to actively sell it to anyone. Many large retail outlets are laid out indifferently or confusingly, and have all the problems with the diversity and selectivity of their stock that I’ve described above. In a lot of cases, short-sighted middle management has added to the problem by requiring sales staff to aggressively push unnecessary warranties or robotically attempt to encourage customers to acquire consumer loyalty cards, to make the experience of shopping intrusive or unpleasant.
5) Saturation of personal ownership, particularly leisure and cultural goods. For example, the music industry, with its obsession about piracy, doesn’t seem able to bend its head around the possibility that another problem they have is that older music consumers may simply have hit a point where they don’t need or want any more music–that they’ve assembled the back catalogs of work they really like and are now vastly more selective about what they might want to add, limiting to new work that they enjoy or the occasional addition of older work. Or maybe they do understand it, hence the constant drive towards new formats with the insistence on sabotaging their compatibility with old formats. This is the only thing a lot of culture-industry and leisure-goods manufacturers get now: steal back the old stuff of durable quality that we foolishly sold to people and require them to buy new stuff where we stick in some expiration date or limitation on its use–rather than attending to the production of new material that might motivate many consumers to a purchase.
If one of the goals of stimulus is to get American consumers shopping again, then I think it’s going to take some substantial changes to the entire retail landscape for that to be more than a momentary upward blip in a relentlessly downward spiral. And at least some of those changes will involve rethinking the size, scale and ubiquity of retailing. Brick-and-mortar shopping needs to move back towards smaller but more knowledgeable and invested sales staff who are better compensated and respected for their work. It needs to offer better choices from a genuine diversity of goods, to build back catalogs and long-tail selections on the shelves, to look for local or variant producers. Retailers have to stop trying to manipulate information asymmetries about price, availability and quality to their benefit, and have to start investing in standards and regulations that improve the conditions of manufacture.
This ultimately means lower aggregate sales and fewer retail jobs, in all likelihood. But it’s the only stable long-term foundation for mass consumption that I can see. I’m absolutely not one of those critics of consumerism who basically loathes it from start to finish: there is a great deal to like about late 20th Century material culture in the U.S. and Europe, quite aside from the fact that consumerism is now the heart of the only global economy we can plausibly imagine. Retailers need to think about what’s gone wrong in the part of the economy that they control, and fix it independently of the fixes being aimed at the financial sector. If they fool themselves into thinking that Circuit City is the fault of Citigroup, then don’t look for the consumer economy to have a healthy revival regardless of what happens to toxic bank debt.