From the pages of Images Retail (June 2009)

Retailing in Recession

Consumer spending in the United States rose to 71 per cent of GDP during 2008, from 63 per cent about 25 years ago. Spending is likely to retreat to those earlier levels over roughly the next decade. The conventional wisdom already has dismissed any sales growth in 2009 and does not expect even modest stirrings of a recovery before middle of 2010. We know that this stressful period will end, but we don’t know when. We also know that doing something is better than doing nothing.

So what to do? For retailers and brand marketers, the question is existential. Priority number one is survival. With the caveat that there are no easy answers for navigating through this sea change, here are three prescriptive actions required to survive:

• Generate Cash: cash requisite for survival.
• Strengthen Trust: remain true to everything your brand promises and to your commitment to your customers.
• Communicate: Stay intensely engaged with your customers, employees, and all of the business’s other important constituents.

Beyond survival, to emerge as a stronger company, seek the opportunities lurking in this crisis. Be especially sensitive to the changing needs and attitudes of your customers. Fearful of job loss, home repossession, and diminished savings and net worth, consumers act as if they are mourning the loss of a life that had seemed eternally optimistic, abundant, and secure. Be ready with the right product, prices and, most important, with the right attitude. No one really knows what life will be like in the later stages of economic recovery. Conspicuous frugality is the new conspicuous consumption. In this fundamental shift away from conspicuous consumption, a sense of responsibility and community is likely to replace the luxury logo as the badge of accomplishment.


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