Over the past four weeks, I’ve had the opportunity to visit several cities and speak to hundreds of business people from all walks of life: Car dealers, restaurant operators, retail store owners, realtors, contractors, manufacturers and more. In each instance, this question has come up repeatedly: “Do you think we’re officially in a recession yet?”
This is the answer I have given, every time: It doesn’t matter. As far as I’m concerned, the technical state of recession is of little significance unless you are a television anchor, a financial analyst, or a political pundit. Whether the Conference Board, the Fed, or anyone else thinks we’re in a recession is of little direct consequence; it's what your customers think that matters.
Nielsen recently published a report about consumer attitudes toward recession. It is a global report (not just U.S.) which found—among other things—that 80% of people in North America think that we’re either in or entering a recession. (By the way, the research was conducted in April, 2008.) At that time, the pundits would have told you that we were technically not in a recession. (They’d say we’re not right now, for that matter. But obviously, the pundits and I are not on the same page.)
Folks, if 80% of your customers think you’re in a recession, you’re in one. That having been said, here’s the good news: Perhaps we can stop focusing on the recession, and start focusing on the recovery.
Implications: Even though a “culture of recession” exists in many sectors, the spending isn’t ending; it will simply be changing, in response to changing consumer needs and priorities. If you’re a restaurateur, worried that people will be dining out less, what can you do to earn the dollars they’ll still spend? If you sell appliances or dining room furniture, how can your goods “upgrade the experience,” for a family that finds itself dining at home more often? Perhaps the smart money right now is on some good old-fashioned customer research, so that you’re sure you know what priorities your customers (and prospects) have right now. Are they looking for simply a lower price? Or might they be interpreting “value” as longer-lasting quality? Have the experiential benefits of the product you sell become more important?
A recent Marketing Daily article offered this ironic look at purchasing priorities: Over the past few months, as the economy has tightened, sales of health care and food have fallen, while sales of big screen TVs have grown. Perhaps the consumer rationalizes the plasma TV purchase as a way of avoiding frequent (and potentially expensive) “nights out” on the town. So the big-screen TV maker isn’t just competing with other companies who make the same thing. The manufacturer is now competing with the movie theatre, the nightclub owner, the theme park operator.
Get the picture?