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.

Recovery, now 33 months old, continues to have strong points and soft spots

Observation:   An article in today’s New York Times reminds us that just as the recession did not treat everyone equally, the economic recovery has both favorites and underdogs… driven by employment, geography, and industry category.  Click here to see that story.

Implications:   If you’re a business owner, manager or marketer, it remains critically important to tune-in to the customers you serve and aspire to serve—locally—more so than you focus on the national headlines of the day.  Just as the headlines out of Wall Street and Washington tended to be overly gloomy as we entered recession back in late 2007, the national news can be misleading during the recovery; while the country, as a whole, is gaining economic momentum, there are parts of the U.S. that are not feeling the upswing as much.  Further, because we are approaching an election, candidates are extremely critical of the current economic climate, and incumbents tend to be extremely positive about it.  Reality often lies somewhere in between.

In what ways can you determine how your local customers are feeling about their future prospects?  Could it be as simple as walking around the store, lobby or dealership… and asking folks how they’re doing?  Or might you pay closer attention to products and services you sell that are related—either directly or indirectly—to things like employment, the price of gas, or other household spending influences?  Could it be that a little primary research is in order?

Consumers can be a great source of information.  And they’re a source that’s very close to your cash register.

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

What were once vices have become habits

Observation:  A BIG Insight study was highlighted in today’s Research Brief that suggests many of the financial survival techniques that consumers picked up during the recession have endured.  Click here to see the story.

Implications:  This fits nicely under the theme of economic reconciliation, something we’ve written about frequently here (click here to see the set). 

Consumer have become generally more:  Prudent, diligent, judicious, deliberate, discretionary.  What do these behaviors look like in your store, lobby, office or dealership?

Another great question:  What are people doing with all that money they’ve been saving?  I would argue that they’re spending more of it… in ways that are also prudent, diligent, judicious, deliberate…

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.

Because income fuels consumption, here are some employment issues worth considering

Observation:   Today’s USA Today features an enlightening story about job prospects for 2012, including which categories and regions are most likely to hire.  Click here to see the story.

Implications:   I’m getting excited about the prospects for job growth in a lot of categories… and in regions that include those hardest hit by the real estate meltdown.

As these employment levels rise, are you monitoring the progress in your own market?  Timing is no less critical in a recovery than it was when we were headed into the recession back in 2007 and 2008.  Are you poised to speak with consumers who are seeing their spending power return?

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.

UPDATE: Moving Black Friday to Thanksgiving could make some retailers… late to the party

Observation:  Much has been written in recent weeks about the retailers who plan to open and offer their “Black Friday” specials a day early, on Thanksgiving Day.  There’s been a bit of pushback for companies who will ask their employees to sacrifice a family holiday for the chance to help the company rack-up a few more holiday dollars (click here for a sample posting on the topic).

Well, today’s Marketing Daily suggests that more than half of us have started shopping already.  Click here to see the story, which is based on data from BIGResearch that was done for the National Retail Federation.

Implications:    With consumers sticking to their methodical ways when it comes to spending, it only makes sense that they’d try to avoid cramming so much expense into a few short weeks of holiday shopping.  The earlier start to the season helps consumers spread-out the cost of the holidays… and use less credit along the way.  Think of it as a Do-It-Yourself layaway plan that the consumer is using to make gift giving more manageable.

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.

Small Business Saturday is November 26

Observation:  The founders of “Small Business Saturday” offer tips to help local companies excel this holiday season, in this recent story from Inc. magazine (click here to link).

Implications:   For the moment, many people are most closely scrutinizing the behavior of big business, and perhaps showing a tendency to sympathize with small, locally-owned companies.  If you’re among the latter, it might be a great time to showcase the number of local employees you have, as well as the local causes your company supports either through volunteerism, cash donations, or in-kind contributions.  Of course, your advertising should focus on a wise strategy (why people should buy from your business) along with effective tactics (why people should buy NOW).  But consider whether a part of your strategy should be to leverage your local nature in your marketing messages!

Favorable winds are only so if you put your ship in the water and sail.

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.

We interrupt all this negativity for a little more good news

While many experts were focused on stock market gyrations and gloomy headlines about the world economy and Washington gridlock, consumers spent much of September shopping.  That is, except those who were going back to work.

Today’s Marketing Daily is among the sources that reported stronger-than-expected sales for retailers in September.  You can read that story by clicking here.   Even better than that news is this:  The number of new jobs created in September was better than forecast.  (I refer to that news as “better” because higher employment affects more than just one month.)  See the Washington Post version of that story by clicking here.

Implications:   … and I’ve said it a thousand times.  If you focus only on the news out from Pennsylvania Avenue and Wall Street, you’ll drive yourself crazy.  Focus, instead, on that micro-economy that exists between your company and its consumers. 

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

Consumers grow more cautious on economy, jobs

Two stories related to consumer confidence caught my eye this morning.  The first cited research from Bankrate that appeared in today’s Marketing Daily; it suggests that consumers have cut-back over the past sixty days in response to news about the economy (click here to see that story).  The second story appeared in today’s New York Times, and focused on fears about the job market (click here to see that story).

Implications:  The debt ceiling debacle of August added new worry to a period of concerns about a second recession for many consumers.  Are you sensing that politicians on both sides of the aisle are more loyal to their political party than the nation’s economic priorities?  I don’t think I’m alone on that one.

Consumers can be expected to focus on their own, personal—and household—micro-economy for the foreseeable future.  Make sure the product or service you’re selling is presented in terms of how it will make the household more productive, cost-efficient, or enjoyable (part of hiding from the recession continues to mean spending more time at home).  Or, present your more indulgent products/services as a way of getting away from it all. 

Either way, it looks like we’re still in a period when it is critical to focus on the consumers you serve (the folks who live on Elm Street), rather than the news coming out of Pennsylvania Avenue or Wall Street.

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

Wild swings in stock markets less shocking than they used to be

Like many folks, I’ve grown tired of references to, “the new normal.”  But I’ll come close to using that descriptor in suggesting that for the stock market, the new normal may be abnormal.  That notion came to me this morning as I read this story in today’s New York Times, which reflects on the wild gyrations most investments are delivering right now… and asks whether something fundamental has changed in the way investment markets are working. Click here to see the story.

Implications:   Are your consumers less spooked—more conditioned—to the inflammatory headlines about the stock market, lately?  (Those shocking headlines are, after all, appearing very frequently.)  Are they sensing a chasm between their household economy and the greater, national or global economy?

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

Wal-Mart brings back lay-away

Another story from today’s Marketing Daily explains that the world’s largest retailer is returning to an old standby:  Offering lay-away.  Click here to see the story.

Implications:  According to the story, lay-away service was discontinued by Wal-Mart about five years ago.  Sears brought layaway back in 2008… after a twenty-year absence.

It’s an old idea that these retailers are hoping will appeal to consumers who still have an aversion to relying heavily on credit.  Are there any new (or old) ideas that could help you do the same?

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

Creating consumer confidence… at the local level

Ben Bernanke stopped here in Minneapolis yesterday to speak at an economics luncheon, and today’s New York Times shared an interesting perspective on his remarks:  That, as tough as things are, consumers think the situation is even worse than it really is.  Click here to see the story.

Implications:  Alas, the Federal Reserve chairman realizes who sets the tempo for the economic recovery… the consumer, of course.

We can debate all day long about whether the current sentiment of consumers is rational or not.  But here’s a better idea:  Ask what you can do to amplify the optimistic, encourage your customers to enjoy themselves as they escape reality by walking through your store, or deal with today’s realities by taking advantage of the products and services that you offer.

I’m not waiting for the government—either party—to create consumer confidence.  We’re going to have to do it ourselves.

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

What women want: Less anxiety

Today’s Marketing Daily features a story about the stress facing American women these days.  The information comes from a study by Boston Consulting Group, and suggests that household finances have taken-over the #1 spot (from time sensitivity) on the list of things causing anxiety.  Click here to see the story.

Implications:  I don’t think we should assume that time sensitivity is no longer causing anxiety.  Concern about household finances is “in addition to,” not, “instead of” all the other stresses involved with running a household.

Have you talked with your customers, lately?  What’s most on their minds?  How can you relieve some of that stress?  It might be in helping them buy more for the dollar.  Or, it might be a way they can spend time forgetting it all (i.e., a night our at your restaurant, a weekjend away at your resort, a few hours at your day spa, a few minutes at your coffee shop, or an evening relaxing on their new sofa, perhaps?). 

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