Follow-Ups: The New Frugality, Private Label

We’ve often discussed the question of whether “The New Frugality”, the idea that recessionary cutbacks by consumers will be permanent, is for real. The New Yorker doubts it, citing similar forecasts in the past:

Recessions regularly give rise to assertions that consumers will begin spending more responsibly. Toward the end of the 1990-91 recession, for instance, Fortune reported forecasts of the “death of conspicuous consumption.” Time ran a cover story on the return to the simple life, arguing that “after a 10-year bender of gaudy dreams and godless consumerism, Americans are starting to trade down.” Consumer-behavior experts predicted that people would be more frugal in the nineties, and consumers themselves said they planned to cut back on spending. It didn’t happen. A decade later, the bursting of the Internet bubble and the impact of 9/11 led many to predict that Americans would consume less—and we all know how that panned out.

Another regular topic here is private label, and we just saw a leading apparel brand turn itself into pretty much a private label, as Liz Claiborne signed an exclusive agreement with J.C. Penney, which means they are leaving Macy’s:

Liz Claiborne's plan to sell its namesake sportswear only at J.C. Penney Co Inc stores and on a television shopping network highlights a new turn in the ongoing rivalry between the mid-tier department store chain and its slightly more upscale rival Macy's Inc.

The decision Claiborne announced on Thursday to sell its Liz Claiborne and Claiborne brands exclusively at Penney ends a decades-long relationship between the brand, founded in 1976, and Macy's.