Luxury Consumers Scrimp for Sake Of Planet, and Because It's Cheaper

By JENNIFER SARANOW

In this economy, it's easy being green.
Kelli Donley, a 29-year-old executive at a nonprofit group in Tempe, Ariz., says she has always been environmentally conscious, bringing her own bags to the grocery store and limiting her driving. Now she's "conserving clothing," too, by shopping at second-hand stores.

A reusable shopping bag makes an iconic appearance in a grocery store.
A year ago, when Ms. Donley and her six closest friends got together, they would discuss the latest designer jeans at Nordstrom, Dior's new cosmetics and exotic vacations. More recently, as the value of their stock portfolios and homes has plummeted, the talk has turned to crockpot recipes, coupon clipping and their latest purchases at thrift shops.
"It's definitely all of a sudden very cool to be cheap," Ms. Donley says.
The twin currents of an economic downturn and rising concern about the environment are merging in a shift in consumer psychology. After a decade of conspicuous consumption, many middle- and upper-income Americans are no longer comfortable showing off $300 Gucci sunglasses and $8,000 Hermes Birkin bags. They are developing a distaste for extravagance that promises to affect spending on everything from cars and travel to electronics, fashion and household goods -- and to last at least as long as the recession.
"Our retail and manufacturing clients are seeing almost an aversion to consumption," says Todd Lavieri, chief executive of Archstone Consulting, which tracks retail spending patterns. "In previous downturns [such as in 1991 and 2001], we have often seen shopping as therapy." Now, with credit conditions so tight, Mr. Lavieri says, "people aren't shopping to feel better. They actually are not shopping to feel better."
And that behavior (to be sure, a luxurious problem in a bad economy with high unemployment) dovetails neatly with environmentalism, another way people like to feel better.
Over the past year, some affluent Americans have simply "given up the fight to keep up with the Joneses," says Pamela Danziger, president of Unity Marketing, a research firm in Stevens, Pa., while others have decided that "spending money on luxury is a poor use of resources in a climate of high gas prices and rising carbon footprint."

Ms. Danziger is already seeing a significant change in behavior. In a Unity Marketing survey of 1,200 affluent consumers in early October, more than half of the respondents, whose average annual household income was about $210,000, said they had shopped less frequently in the past year and were cutting spending by shopping at outlet stores or at sales.
At a panel last week, Peter Boneparth, who was chief executive of Jones Apparel Group Inc. when it owned the upscale Barneys New York chain, said, "The luxury business is in for a really hard time" and that it would be "the slowest to recover." Mr. Boneparth said the global financial crisis had triggered a fundamental change in wealthy consumers' psychology and that "it's no longer chic to be spending" as in the past.
The shift began even before the credit markets broke down and the stock market plunged. Many Americans had already begun to question their "freewheeling consumption" and move toward "a culture of responsibility," says J. Walker Smith, president of global trends researcher Yankelovich, a unit of the Futures Company. For many, he says, environmental concerns were an important factor in this shift.
Environmental consciousness has often been associated with added expenses such as solar panels and organic food. But Wendy Liebmann, chief executive of consulting firm WSL Strategic Retail, has noticed that the economic downturn is accelerating mainstream acceptance of the thriftier behaviors of the green movement, like cutting out bottled water and growing vegetables.
"People are saying, 'We are going to save money, and we are going to save the environment,' " she says.
Lindsay Lefevere, a 31-year-old book editor in Carmel, Ind., has been economizing by cutting out weekly shopping trips to Target and daily coffees at Starbucks. Ms. Lefevere, long an avid recycler and crockpot user, has now begun canning apple butter and cherries for holiday gifts, recycling household items as wrapping paper and consolidating her errands to conserve gas. The economic crisis "is definitely making me more conscious about the environment," she says.
Even when they spend, some people are seeking environmental benediction for their purchases. Miranda Garcia, who at 33 is expecting her first child, recently bought a new Lexus SUV with side air bags that her husband thought would be safer than their old car. Ms. Garcia at first resisted, saying that buying a new car seemed ostentatious. She is still uneasy about it, but is quick to point out that the SUV is a hybrid.
"We wanted to do the right thing," she says.—Ray A. Smith contributed to this article.
Write to Jennifer Saranow at jennifer.saranow@wsj.com