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As inflation squeezes budgets, Americans swap excess for experience
Americans are maxed out. Nearly three out of four us say that inflation is impacting our ability to pay household bills, and according to Moody’s Analytics, U.S. families are now spending $709 a month more than they did two years ago—with little to show for it.
Most of that increase is driven by rising household costs, from buying, to maintaining, to insuring, to storing. This proverbial squeeze has led Americans to realize the crippling amount of stuff they have and the cost it has on both their wallets and their state of mind.
According to a 2019 nationwide survey by Mercari, 63% of Americans say they have too much stuff, and more than one-third of Americans (37%) say they've experienced "extreme anxiety" due to a messy or disorganized home, closet or garage. More than one in five (21%) say they've actually lost sleep for this reason.
The effects are starting to bleed into culture. People are cutting things out.
The Resurgence of Minimalism Trends in 2023
We’re seeing the minimalist aesthetic and mindset resurface through fashion, art, food and lifestyle indicators. From seven “Tiny House” TV shows, to viral TikTok beauty trends like “Skinimalism” and “Skin Streaming” to the resurgence of minimal art forms like organic minimalism and line art, cultural signals are pointing toward a less-is-more approach.
Hardly a new phenomenon, minimalist thought runs through Ancient Roman architecture, Renaissance art and design movements in the 1960s and ‘70s. Practically, it’s about owning and creating only what adds value and meaning to you and your loved ones—creating a more meaningful and fulfilling life through shedding excess.
Going deeper, we see broader socio-economic currents steering this behavior.
Socio-Economic Forces Behind Minimalism
Inflation and interest rates are impacting how people entertain and take care of themselves. Seventy percent of consumers are cutting back on nonessentials, from weekend outings to gym memberships to subscription services, resulting in a phenomenon that’s often been called the “Great Cancellation.” Younger consumers are also dining out less and having dinner parties instead—or just treating themselves to whatever is around (see our article on Girl Dinner).
Environmental Awareness and Minimalism
This summer’s record heat wave has delivered a brutal reminder that our planet is in a climate crisis, with social activist brands like The Ocean Cleanup and Patagonia bringing sustainable product solutions—and business practices—to market. These efforts are resonating with consumers: A recent study by McKinsey reveals a clear and material link between Environment and Social Governance-related claims and consumer spending across various product categories.
Consumers Are Prioritizing Meaningful Spending
Here’s the connection: Americans may be buying fewer things, but we’re prioritizing our dollars on goods and services with greater meaning.
In the travel sector, we’ve seen how, in the last five years, Millennials have led the way in valuing experiences over things. But travel itself is also becoming simpler and more meaningful, as tourists focus on creating personalized experiences centered around one’s core passions, like food, self-care, family lineage and ventures off the beaten path. Contrast this attitude with the typical smorgasbord of amenities that can make vacation planning overwhelming and stressful.
Brands reliant on sales of physical goods, meanwhile, are changing, updating or extending their offerings and experiences.
Mattel delivered the box office hit of the summer by transforming its physical Barbie doll into a Hollywood icon, resulting in a surprise profit amid lower toy sales. With 14 additional movies planned from American Girl Doll to Matchbox, their mission around “Purposeful Play” lends itself beyond focusing solely on concrete things like dolls, vehicles and action figures into more experiential offerings like games, shows and events.
For their part, automakers are already laying the groundwork to develop technology and services over selling personal vehicles, resulting in fewer liabilities and headaches for the consumer.
Trends in culture always shift back and forth, so it’s likely that consumers will use minimalist principles when solving their problems throughout their daily lives. As rentals in big metropolitan markets continue to rise and companies like BentoLiving are reshaping the real estate market with small footprint lifestyles. Premium brands that hold minimalism and simplicity in mind while offering unique experiences—like Apple’s Vision Pro—stand to gain over companies like Meta, whose products have been criticized for their complexity and artificiality.
Embracing Consumer Minimalism in Your Branding
With consumers reining in physical purchases, think about the ways that your products lend meaning to peoples’ lives. Where are moments when you could extend the essence of your brand to improve someone’s day? As we follow this trend forward, we’ll watch how Americans continue to respond to squeezed budgets and increasingly personal choices in their everyday lives.