For under- and un-employed, stress lingers

Trend Observation:  Today’s New York Times offers a stark reminder that while many people are in a period of financial reconciliation, if not recovery, there are many folks who—because of their job situation—are still working very hard to create or build household income.  Click here to see that story.

Marketing Implications:  There is a significant share of people out there who will remain price-driven for some time to come.  It’s not everyone.  But it’s a significant number of people across the U.S.

Do you offer a product or service line that appeals to the price-sensitive nature of people trying to make ends meet?  Are some of your long-term customers in a different financial position than they were five years ago… and is that income likely to come back?  How are you—or are you—messaging to this constituency, in a way that they’ll appreciate your empathy when their incomes (and consumer appetites) return?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Automotive rebound continues

Trend Observation:   Automotive was among the hardest-hit categories during the recession of 12/1/07 through 6/1/09.  The contraction was illustrated by the closure of many dealerships, as well as vanishing name plates like Saturn, Hummer, Mercury, Pontiac and Plymouth.  But it seems the pendulum has headed the other way, according to this story from the Detroit News; there are 66 new dealerships, and roughly 2,400 new jobs in the retail automotive sector, and sales are pacing up about 10% year-over-year.  Click here for the full story. 

Marketing Implications:  What does the comeback look like in your category?  Is it as robust as the increases in the automotive, home furnishings and home improvement industry?

While it is critically important for a company to see a downturn coming, and time its’ more conservative approach very carefully… it is just as important to recognize when your category is on the rebound, and time your more assertive plans with equal precision. 

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Net worth returns to that of early 1990s for many

Observation:   A story from the New York Times (NYTimes.com) explains that, according to the Fed, the financial meltdown of 2007-2009 cost the average American roughly two decades of prosperity; the typical household is revisiting a net worth that they haven’t seen since the early 1990s.  Click here to see that story.

Implications:  Perhaps we can expect the more careful, prudent spending that has followed the Great Recession to linger for quite a while… interrupted, perhaps, but the occasional indulgence that feels like a bit of a reward.

Are you still explaining the value behind the product or service you sell?  (And by value, I don’t just mean “cheap price.”  I’m talking about how your product, service and purchase experience add value to the consumer’s life.) 

This story has dramatic implications, also, for anyone in the financial planning or investment business.  A lot of re-building has yet to be done.  Are you messaging in a way that demonstrates how you can help?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

De-leveraging process has made progress

Observation:  A story that will appear in tomorrow’s New York Times (available now at the NYTimes.com website) suggests that U.S. consumers and lenders have made tremendous progress in cutting debt.  A graphic illustrates just how far and fast credit liabilities and fallen, and the main story explains that while consumers deserve much of the credit for their self-imposed austerity, lenders, too, have speeded the process along with the amount debt that has been written off in the form of losses.  Click here to see the full story.

Implications:   During the recession of 12/2007 through 6/2009—or in the several months that followed—many pundits (and perhaps many families) wondered whether the U.S. economy could get out from under its considerable personal debt. 

It would appear that there is light at the end of that tunnel.  And that’s good, since the economy is fueled so heavily by consumer spending; spending that does not happen when consumers feel fear about their employment future or the pressure of outstanding debt.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Automotive recovery shifts into higher gear

Observation:   A recent story from Automotive News indicates that the car-buying public has moved from “need-based buying (replacing an older car when it becomes unreliable) to “want-based buying” (buying a car because they feel like it).  Click here to see the story.

Implications:   While everyone knows what is meant by the term, “The Great Recession,” few people feel like we ever had the chance to celebrate a “Great Recovery.”  That’s because the turnaround has been very gradual, allowing no great announcement of good tidings.   

But that having been said, the recession lasted (only) 19 months, and at this writing, the recovery has lasted 32 months.  The wariness has, for many people, worn off.  While gradual, the recovery has turned out to be somewhat reliable for many Americans… and they’re ready to get their lives underway again.  That is what we mean when this site references the term, "Reconciliation" (see our other postings on the topic by clicking here).

How are things in your category?  Have consumers begun to return?  Are they coming back so gradually that you’ve failed to notice?  Have they returned to the category, but not your company?  The mindset of many consumers is shifting to the good; has your messaging kept pace?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

A by-product of bank stress tests: Stressful PR?

Observation:   A story from today’s New York Times explains how banks fared during the most recent round of Federal Reserve stress tests.  This systemic scrutiny was created after the banking collapse of the Great Recession, as a way to determine whether major banks were solid enough to survive another dramatic economic downturn or other difficult events.  According to the NY Times article, 15 of 19 major banks are in strong condition.  Click here to see the story.

Implications:   Think about this.  When you see a headline that indicates, “15 of 19 banks are solid,” I can’t be the only person who’s first thought is:  Who flunked?  Who’s in trouble?  Who are the four kids that had to stay after school?! 

Stories like this remind us that, just a few years ago, we were hearing many institutions described as, “too big to fail.”  And it might represent an opportunity for smaller, more local/regional institutions to present a more human side to the financial industry.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

“Frustration Nation" leads a new list of consumer trends from Forbes

Observation:   Earlier this week, Forbes published an entertaining list—and maybe even an insightful one—of consumer trends.  It starts out with Frustration Nation (less confidence in institutions), Human Touch (the desire to interact when we transact), and Life on Pause (the feeling that careers or other life progress might be on hold).  Click here to see the full story.

Implications:   If nothing else, these lists give us pause to think about what’s going on in our own businesses.  This is a well-written briefing that lets you quickly decide whether the trends they cite are relevant to your company, product or service… and start asking how you might respond to one of many consumer sentiments.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Auto sales pacing up

Observation:  Earlier today, I wrote a story on the stabilizing job market, and mentioned how that stronger employment could positively impact consumption.  As if on cue, another email alert popped into my in-box this morning, explaining that automotive sales for January were very strong.  The note came from Automotive Digest, and cited this story from Bloomberg News (click to link).

Implications:   Many people demonstrated restraint both during the recession and in the 31 months that have followed.  By now, though, if there is a job or two and a stable income in the household, we can expect consumers to act on their pent-up wants and needs.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Job opportunities coming out of hibernation

Observation:  Frequent visitors to this site know that I find it hard to resist sharing good economic news… and today’s labor report is just that.  The unemployment rate fell again for the month of January.  You can read the Washington Post version of the story by clicking here.

Of course, the employment rate varies by region and job category.  Today’s Washington Post also provides some county-by-county data that you can review by clicking here.

Implications:   There are two reasons to share this kind of news.  First, in an age where we are bombarded by headlines of gloom and doom, I think it is important to amplify the optimism of good news when we can.  (Sometimes, temperament and progress can be self-fulfilling prophecies!)  Perhaps more importantly, a more stable workforce with more reliable paychecks can lead to more stable and reliable consumption. 

It is important to have great timing when heading into a recession, so that one knows when to trim inventories, restrain hiring, etc.  But it is no less important to have great timing when coming out of a recession… and having the goods and personnel required to satisfy customers when they come out of hibernation!

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Report suggests consumers are loosening some of their aggressive money-saving tactics

Observation:  Today’s Research Brief indicates some consumers are less likely to forgo that morning cup of specialty coffee, less likely to brown-bag their lunch, and slightly less likely to buy store brands.   The observations are fueled by a Harris Poll survey from December, 2011.  Click here to see the full story.

Implications:   Saving money became an extreme sport during the Great Recession, but it should not be surprising that those extremes were not comfortably sustainable for the long haul.  As breadwinners are expected to do more and more at work—with some indeed carrying two or more jobs to replace one that was lost—it only makes sense that fatigue would set in… and some of those small indulgences or conveniences we used to enjoy would return.

Are you seeing any indications of a consumer that has given herself permission to spend just a little bit more freely?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

A look at the chasm between rich and poor

Observation:   A recent Research Brief newsletter suggests that the chasm between those who have and those who have not can look differently, depending on the group you are in.  The article cites Pew Research in suggesting that 66% of those surveyed think the conflict between rich and poor is “very strong.”  But feelings can vary significantly depending on political view, socio-economic status and ethnicity.  Click here to see the briefing.

Implications:   We’ve been referring to the current economic climate—and the chasm between rich and poor—as the dumb bell economy.  A lot of people at least perceive that the middle class has shrunk… and that there are lots of people on either end of the financial spectrum, and fewer folks in between. 

How are your customers feeling?  Are they, like many people, trying to decide where they fit into the spectrum?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Some good news for the end of the week

Observation:  This morning’s Commerce Department report indicates the economy grew at an annual rate of 2.8% during the final quarter of 2011, for a net expansion of 1.7% in 2011.  Click here for more details, provided by a Washington Post story released earlier this hour.

Implications:   It’s always fun to end the week with a little good news, and this is that.  But any business owner, marketer or manager should enjoy this story, and then remember that the most important economic indicators come not from Washington or Wall Street, but from the consumers they serve on a daily basis.  In this age of reconciliation, most people are more focused on their household (micro) economy than the station of the national or global (macro) economy.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Consumer to remain cautious for the foreseeable future

Observation:   The premise of Elm Street Economics is to avoid the collective noise that tends to come out of Wall Street or Washington, and refocus on what your consumers are trying to tell you.  To that end, a great story from yesterday’s New York Times takes a consumer-point-of-view in helping us understand the current situation faced by many folks, and the behaviors we might therefore anticipate.  Click here to see the full story.

Implications:   This story seems to suggest that consumers are not going to single-handedly pull us into a robust recovery, at least not in the next few months.  They remain cautious and careful; reconciled to spending in a way that matches their current financial realities. 

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

The reconciliation of 2011

Observation:   While on vacation over the holidays, I had time to think about how we could define “the year in consumers.”  The word that kept coming to mind was reconciliation.

Consumers spent much of 2007 through 2010 in various states of shock, fear and denial.  While a robust recovery still escapes the U.S. economy, a modest one is underway, and the economic temperature has at least stabilized.  People have had the chance to get used to this new set of economic realities, and manage their household finances accordingly.  In other words, by 2011, many people had reconciled their budget with the new financial landscape.

Implications:   Reconciliation means balancing the checking account… making sure your money is accounted for and you know where you stand.  Part of this process means defining one’s spending habits as either needs or wants, and prioritizing accordingly.  (By the way, not everything the consumer classifies as a need is truly a need… and many of their wants could, at one time, have been defined as a need!)

Consumers have reconsidered how they define value.  That makes it a good time for companies to reconsider their value proposition!  Have you taken a good look, lately, at the value proposition of your company, products or services?  Has your marketing strategy been altered to keep-up with the way consumers now contemplate spending money in your category?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

A new term for what might feel like recession, but isn’t: Reconciliation

Observation:  During a recent Elm Street Economics workshop for small businesses, I played a video clip of perhaps a dozen consumer responses to this question:  “Do you think that the economy is still in recession, or is it in recovery?”  The majority of responses were both swift and firm:  “Recession.”

Of course, most economists will tell you that, technically, we are no longer in a recession.  But based on our interviews around the country, technically, people don’t care.

Probing a little deeper with our consumer panels, we ask how life has changed.   “What’s different now in your household now, compared to the way it was before the recession?”   What impressed me about the responses to this question is that people have to stop and think about how life used to be.  But that only makes sense, as the recession technically started a full four years ago tomorrow, on December 1, 2007.      

By the way… it is worth noting that the period since the recession ended (June, 2009) has lasted far longer (roughly 27 months) than the entire term of the recession itself (roughly 19 months). 

We noticed another pattern in our consumer panels:  Many people have accepted and adapted to the financial realities they now face.*   Some participants explained that they now shop more carefully before making a major purchase, or that the kids are now expected to earn their own spending money.  Some are more conservative about their use of credit, or they’ve reduced the frequency of their visits to a specialty coffee shop.  Others are spending more on upkeep so they can hold on to that car a little longer, and some have opted for Netflix in lieu of going out to see a movie.

In a word, consumers have reconciled their spending with their income and assets. 

In a recent post, I suggested that frugality might not be simply fashionable for some consumers; it might be more accurate to call it their new operating system.   [See the posting 11/14/11.]

Implications:   In almost every example of reduced spending, consumers will explain that they’ve come up with an alternative (e.g., spending more on automotive service so they can spend less on a new car payment, or buying a new home theatre to avoid the cost of out-of-home entertainment over the long haul).  They’re spending somewhere, just not always on the same things they used to spend on.

In an age when people are more likely to consider alternatives to past purchasing habits, it’s a great time to ask the question:  Who are you the alternative to?  In what situations might your company, product or service act as the perfect replacement to a previous spending habit?

People have spent four years getting used to the idea of home values that are smaller and job security that feels less secure.  Contrary to the official economic status, they feel like there’s still a recession going on… but it doesn’t scare or shock them anymore.  They have learned to cope—reconcile—and carry on as best they can.  They have lives to live, after all.  Does your value proposition—and your messaging—fit into that new lifestyle?

* Please note that I did not use the now cliché reference to, “the new normal.”

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

The dumb bell economy

Observation:  During a small business workshop last week sponsored by Cox Media Group of Jacksonville, I referred to our current state as, “The dumb bell economy.”   The term helps illustrate an environment where there seems to be a lot of people on one side who are affluent, and a lot of people on the other end of the spectrum who feel like they have entered poverty, and fewer people remaining in the center… or middle class.

A story in today’s New York Times seems to support this illustration.  Click here to see it.

Implications:    I’ve spoken about the chasm between the “haves” and the “have nots” on many occasions before.  While the dumb bell graphic perhaps over-emphasizes the two extremes of affluence and poverty, it does help make the point.  The middle class has flattened by many accounts.

How have your customers changed over the past few years?  Are they closer to affluence, or living a little leaner than they used to?  Or do they remain in the middle, but feeling a little bit lonely?

Many retailers are, in fact, seeing a shift in their customer profile.  For more insights into these changing tides, see another story from the New York Times, which explains that while some customers are looking up to the stock market to see how they should be feeling… others are looking down to the cost of a gallon of gas.  Click here to see that article.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

It is no longer a recession… it’s a reconciliation

Observation:  This week, when I present an on-location workshop for a few-dozen business owners in Jacksonville, Florida, I’m going to ask people to stop calling it a recession. 

We could call this economic climate a lot of things, but for the time being, at least, it is not a recession.  It is a climate where people are still getting used to the effects of the recession that happened from December 2007 through June 2010.  But that recession is over; consumers simply continue to reconcile their post-downturn financial situation. 

They’re balancing their checking accounts, and re-working the monthly budget.  They’re deciding what’s important, and what they can live without. 

News flash:  Apparently, a lot of them cannot live without spending lots of money on designer coffee.

Implications:    It’s time to explain your value proposition.  And by that I mean, “How does your company, product, or service add value to the consumer’s life?”  Is that value worth the cash and inconvenience you’re asking the consumer to trade for your product or service?

There are still consumers spending plenty of cash out there.  As evidence, I give you Starbucks, which just reported their first $3 billion quarter, according to this story from Marketing Daily (click to link).  Gosh, if my grandmother—may she rest in peace—if my grandmother knew that I had ever spent $4 on a cup of coffee, kind and sweet as she was, she’d have smacked me up-side the head.  She could not have imagined how many people would lay down a five-dollar bill for a latte, expecting only a few coins in change.

Starbucks has explained a value proposition.  Part product, part experience, and part escape mechanism.  It’s a small indulgence that allows them to defy a rough economy.  They’re selling a lot more than coffee… and they’re charging a lot more than a quarter-a-cup.

People will spend more if you show them it’s worth it.  Have you offered a value proposition—a benefit, story or experience—that helps the consumer reconcile their investment in your company, your product, or your service?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

UPDATE: Amplify the optimism

Observation:  If you’ve followed this site for any length of time, you know that I like to pass along positive news when it becomes available.  A few moments ago, the Washington Post issued a release covering this week’s employment picture.  The unemployment rate fell to 9.0% nationwide, a better report than many pundits had expected.  Click here to see the story.

Implications:   The labor market varies widely from region to region, but even if slowly, the job outlook improved last month for the nation as a whole. 

The Great Recession began (officially) on December 1, 2007, and ended (officially) in June, 2009.  But many folks continue to feel its’ effects.  That means that on the first of next month, consumers will have spent four full years reading and hearing troublesome economic headlines.  With that thought as a backdrop, it is more important than ever to amplify any positive news available.   

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

It's time to amplify the optimism

I’m going to be out of the office and “off the grid” tomorrow, but I wanted to end the week with some positive news before I go.  First of all, the stock market had a good start this morning (the Dow exceeds 12,000 at this writing), because of progress with the European debt crisis.  Click here to see the CNBC version of that story… or here’s another example from the New York Times.

Even more important than a one-day improvement in stocks, there was news today that the U.S. economy—more accurately, the GDP—grew by 2.5% in the third quarter.  That relieves some fears that we might have been falling back into recession… as it represents faster-than-expected economic growth.  Click here to see the Wall Street Journal version of that story… or here’s another example of the coverage in an article from the New York Times.

Implications:   Walk through your store, office, lobby or dealership with a smile today.  Big enough that people stop and ask you, “What are you smiling so big about?”  Then, just tell them it was nice to have some great economic news today.  We hear way too much of the negative stuff… and that makes it even more important to draw attention to the positive news; even if that good news only lasts a few days at a time, and even if something nasty drowns-out the positivity next week.

Negativity can be self-perpetuating… either for a person, or for a company.  Amplify the optimistic at every opportunity!

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Pre-occupied with Wall Street

If you’re feeling like your income has lost some of its spending power since the beginning of the recession, you’re not alone.  A story from the New York Times this morning explains that incomes have fallen since the recession is widely held to have ended, due largely to the persistently high unemployment rate.  (Click here to see that story.) 

This issue, combined with pervasive coverage about gridlock in Washington, extreme compensation for many of the country’s CEOs, and higher food and fuel prices, has led to outright economic frustration.  

Yesterday, there was a story in the New York Times about the group Occupy Wall Street and several variations of the movement that have sprouted-up around the country.  Click here to see that story.

Implications:   The NY Times story acknowledges that the “Occupy” movement started very small, but hints that uprisings also started small in places like Tunisia and Egypt this spring, and throughout much of Europe over the summer.  I’m nowhere near ready to watch for a citizen-led uprising here in the U.S.  But smart government officials—and businesses—are noticing this period of discontent.

It might be more important than ever to communicate the logic of your business to your customers.  If there is a price increase, why is it justified?  If you’re a public company and paying dramatic bonuses, what is the logic?  More often now, consumers are not just re-thinking the dollars they spend; they are more closely scrutinizing the very companies they spend with.  If you’re running a fundamentally sound and fair business (which I assume to be the case)… transparency is your friend.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.