Wallets Are Tight, So U.K. Retailers Try the 'Credit Crunch' Sell
Catch Phrase 'Is So of the Moment'; Peddling Shoes, Coffee Makers and CandyBy CECILIE ROHWEDDER
LONDON -- On a recent cover, the British weekly fashion and celebrity magazine Grazia touted stilettos as "credit crunch heels" -- a means "to cheer up in the current economic climate." Rival publications Best and Marie-Claire are heralding the arrival of "credit crunch fashion" and "credit crunch chic" on their front pages as well.
The credit crunch has led to more than bank bailouts. The term has filtered into popular culture here as a catchphrase aimed at Britons with no links to finance. Marketers and retailers are invoking the crisis to convey the opposite of its meaning -- and get consumers to spend.
The department store Selfridges has been offering a candy line called "credit crunch." The store has sold 5,000 of the £3.99 ($6) bags, which contain chunks of crunchy toffee covered in chocolate and are now among the three best-selling products at its confectionery department.
Henry Kaye, a company that sells wedding dresses online and to other retailers, has launched an area on its site: "Credit Crunch Wedding Style -- Budget Weddings." There, customers find "cheap bridesmaids and flower girl dresses" costing less than $84. Putting the phrase on the site has helped sales, says owner Sharon Gavin. "The credit crunch is so of the moment. Everyone is talking about it."
These days, Americans aren't the only ones being socked hard in the wallet -- and suddenly touting cheap chic and recessionista fashion. Britain, too, is coming down from years of unbridled consumerism. Not long ago, Britons en masse considered shopping trips to New York as an economical way to part with their strong pounds. Grocery stores tried to outdo one another with pricey premium and organic foods. Homes were costly and credit was cheap.
But the British spending boom has stalled as the world's fifth-largest economy slides into its first recession since the early 1990s. Britons are reeling from a rise in unemployment and inflation -- fueled by high food prices and utilities bills -- while the value of their houses is plummeting. Even before the crisis hit, the country's consumers had amassed more personal debt than those in any other developed country, according to the Paris-based Organisation for Economic Cooperation and Development. Lots of jobs are on the line, too. The U.K.'s financial sector accounts for more than one-fifth of jobs in the country, compared with only 6% in the U.S. That helps to explain why talk of bank bailouts is popping up in magazine advice columns and morning radio talk shows.
Retailers here are feeling the chill: British retail sales fell 2.2% on a same-store basis in October from a year ago, according to the British Retail Consortium. Total sales were lower than a year ago for the first time since April 2005. The drop was mainly caused by slow sales of household goods and clothing, prompting stores to use whatever means necessary to get Britons buying again.
Now, marketers in all areas are using the credit crunch to hawk their wares. While some are offering straight discounts, others tout an implied savings associated with certain purchases.
An ad for cellphone services by Tesco PLC, Britain's biggest retailer, on bus stops across the country, says, "Tesco Mobile. We won't crunch your credit." Online retailer AOL Europe is offering nine products to "beat the credit crunch." They include a $234 coffee maker, to make a daily latte habit more affordable, according to the site, and a $14 Chinese cookbook to cut takeout bills. The list, says AOL, attracted between 25% and 30% more viewers than regular consumer features on the site.
"We try to be as relevant as possible," says Sean O'Connell, European director of shopping for AOL. "The notion of the credit crunch has become shorthand for us to indicate to consumers, here's a way for you to save some bucks."
Traffic increased at London furniture store Chest of Drawers after it placed an ad in its store window last month. The large cartoon drawn on cardboard boxes shows a family around the dinner table. A child asks: "Is this credit crunch a new cereal?"
The ad was designed to reassure shoppers that they can still afford to buy essential items, says store owner Kim Corbett. "People are terrified," she says. "This is an effort to lighten things up a bit."
Research by London-based consulting firm Envision Retail shows that consumers now frequently evoke the cash crunch as a reason not to buy. By addressing the credit crunch directly, retailers are trying to invert the conventional logic, says Managing Director Jason Kemp.
"It's like saying, you have permission to buy this item because it is credit crunch-proof," says Mr. Kemp. "Then you have a greater likelihood of them buying."
Bold or subtle, the messages aren't working for some shoppers. At a River Island store, Londoner Liz Wakefield recently put a brown, $60 snakeskin-style handbag back on the shelf. For the first time in years, the stylish 28-year-old resisted temptation to purchase a new coat or a new pair of boots. At her job as a department-store buyer, an annual pay raise has been postponed until after the holidays. With her salary unchanged and expenses like rent and heat rising, "I keep looking everywhere," she says.
Discounts weren't enough to tempt Diane Gould, either. The 68-year-old retired office manager recently held a square pink purse on a "50% off" sales rack at London department store Debenhams. "I don't know what's going on. One day, the government has saved us and the next day, we're not saved. There is so much uncertainty now," laments Ms. Gould. "I love these bags, and normally I would have bought one."
Write to Cecilie Rohwedder at firstname.lastname@example.org