Via Flickr : Boston Bill Gone are the “Look what I just got” discussions on the internet as well as local clubs, as hobbyists are buckling down during difficult and uncertain times. Sure you’ve heard the phrase, “This time it’s different”, but it leaves you asking is it really? It is and it isnt. What is new, [...]
Via Flickr : Boston Bill
Gone are the “Look what I just got” discussions on the internet as well as local clubs, as hobbyists are buckling down during difficult and uncertain times. Sure you’ve heard the phrase, “This time it’s different”, but it leaves you asking is it really? It is and it isnt. What is new, is that we’re seeing once irresistible luxuries are becoming resistible for the first time in many years for a powerful minority.
The online aquarium forum world is stalling, at least according to many retailers who spend thousands of dollars every year to attract new business. In the past forums were a place where aquarists flocked to discuss their latest animal and equipment purchases. Really, this is the first time since forums rose to popularity in the late 90s that were seeing a true lack of consumer spending by active online hobbyists. Visitation is still up at many various forums, but the average hobbyists is much more hesitant before pulling out the plastic. While credit card use is climbing in an effort to manage cash flows by consumers (Take a look @ Visa’s 4th Qtr Earnings, up 35%) the fact is marine aquariums are luxuries. As addictive as this hobby can be, there are much more important things in life to worry about.
In today’s Wall Street Journal, Molly Neal and Simon Nixon wrote an interesting piece highlighting the lapse of luxury spending due to economic conditions. Luxury goods were once seen as recession proof for the upper elite brands, but this year even LVMH Moet Hennessy Luis Vuitton (Yes that’s one company) has reported a decrease in demand and sales for their luxury watches and jewels. According to Bernstein, luxury good sales are expeected to fall a shocking 15% this year.
Back in 2005 Ajay Kapur, a global strategist at Citigroup, along with his team came up with the phrase plutonomy or plutonomics. (Google it for some interesting reading on wealth distribution…) Whether this word was used as a metaphor, implying the small and distant characteristics of the planet formerly known as Pluto or disguised as a jab for it’s underworld connotation… take your pick because many will choose both to describe the 1% of USA’s population that own more than 50% of the nation’s stock… with over $16 trillion in wealth. Before this modern crisis, it was thought this group would allow a constant growth in luxury spending, but even these ”untouchables” have seen a massive hemorrhaging in wealth and the effects are now seen every where. It may be too early to tell, but a few business savy aquarists are citing this effect in the aquarium industry as well.
In the past ten years many aquarium companies have put an effort into “premiumization” to attract the affluent. But has this backfired? We are now seeing an intentional shift by some towards lower prices while still emphasizing quality. No where can this be seen more than in the cone skimmer niche. ATB Econo and the brand new Royal Exclusiv-Vertex Cone are prime examples of high end luxuries shifting to attract intelligent and conservative spenders.
If the overall economy is any prediction of what’s to come in the industry we may see more of this. The delicate aspect for any company trying this, is to sell more economically friendly products without devaluing a brand… something that is easier to say than actually do.
What I do find interesting is that the U.S. rare fish market is begining to take off and fend off the Asian markets as more expensive and rare fish enter the States and quickly sell. This rare fish market does overlap into the larger aquarium market, but oddly this group of consumers seems less effected by the economy. Two things come to mind. Either this group is in fact diversified and financially secure allowing them to afford heavy spending, or these are the craziest group of all aquarists and out of sheer madness they can rationalize spending $1K on a 2″ fish. Again take your pick, there is strong case for both!
Although it is in regards to the larger luxury consumer goods industry, Neal & Nixon state there will be many casualities as well as winners.
“The winners will be the megabrands that can outspend rivals on advertising and promotion … the biggest winners of all will be those who can reposition their brands to capture the mood of the times. Good bye, Bling Bling. Hello austerity chic.“
We couldn’t agree more. Although times are tough, aquarists should be ready for more responsive companies and better deals. And always remember, every purchase is a vote. During these trying times these “votes” can be extremely important for the livelihood of a business–support companies that you believe in.
For suggestions on saving some hard earned $$ during this slump, check out our suggestions here: 6 Tips to Save Reef Cash.