Upside of cautious economy: Lower gas prices

Trend Observation:  A story in today’s edition of USA Today suggests that gasoline prices could stay low—or fall even lower—between now and fall.  That’s a far cry from what we were hearing last winter, when there were concerns about stability in the Middle East and problems with major refineries.  Click here to see the story.

Marketing Implications:  Some businesses might profit from going after this “commuter’s dividend” of lower gas prices.  Many drivers anticipated the kind of peak gas prices we saw in the summer of 2008, when the average price per gallon hit $4.11.  With each commute costing less, the consumer might feel as if they have a windfall of found money in their pocket at the end of each week or month.

Any ideas about what they should spend it on?

Mike Anderson, for The Marketing Mind consumer trends blog, service of The Center for Sales Strategy.  

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.

In select cities, real estate turns a corner

Observation:  According to a story from today’s Dallas Morning News, housing prices have shown a year-over-year increase in seven cities, including Charlotte, Dallas, Denver, Detroit, Miami, Minneapolis and Phoenix.  Click here to see the full story.

Implications:   The number of cities listed is not long… but the importance of this segment is huge.  Confidence in home prices is a strong anchor for consumer sentiment.  It’s good to see that, even if only in several major markets, prices are starting to find their way back up.  Here’s to more cities following soon.

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

Consumers giving the recovery some credit

Observation:  A recent story from the Associated Press indicates that consumers are making greater use of credit.  In fact, the jump in use of credit in March was the biggest climb in a decade.  Click here to see the story as published by the Atlanta Journal Constitution.

Implications:   This is an important example of progress in our ongoing economic recovery, as consumers had such a dramatic aversion to credit during the recession itself. 

Credit is generally used when people feel confident that their employment situation and other household income factors will allow them to pay the money back.

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

Small business sentiment seems to be getting stronger

Observation:  A recent story in USA Today suggests that small business owners and operators are feeling a bit more confident.  The article was written based on a study from the National Federation of Independent Business; click here to read the USA Today story, or to access the full report, click here.

Implications:   Clearly, small business confidence rises or falls in response to the confidence of consumers.  While the degree of optimism could still be labeled as “cautious,” it is worth noting that the “Great Recession” lasted for 19 months (December 2007 to June 2009).  While it began in July 2009, nobody refers to the subsequent growth pattern as the “Great Recovery,” because it has not been as fast or robust as recoveries in past recessions. 

That having been said, the recovery has been underway for a full 34 months… which is why we refer to this period as a time of “Reconciliation,” as families continue to manage their household differently, financially, that they might have in the period leading-up to the meltdown.

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.

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.

The car comes first when it comes to paying bills

Observation:   An Associated Press story in today’s Minneapolis Star Tribune suggests consumers have re-prioritized the bills they pay.  The article is based on a study from TransUnion, and explains that while consumers used to pay their mortgage first, then the car loan and credit card bills… the vehicle loan has now taken the pole position over the mortgage payment.  Click here to see the story.

Implications:   There are lots of things going on in this story, in the form of lessons learned and adjustments made during the Great Recession.  First, the labor market placed a premium on transportation:  If you had a job, you needed reliable transportation to fulfill it.  If you were looking for a job, you desperately needed transportation to find it.  Even at risk of foreclosure, the car payment had to come first, because it is so directly connected to employment and thus, future prospects.

But coverage about the mortgage meltdown shed light on the whole foreclosure process, and trained many people that the “grace period” on a home loan might be more forgiving than a car loan.  The repossession process on a vehicle moves much more quickly than the foreclosure process on a home.

More than anything, this story does a great job of illustrating “Reconciliation,” the idea that after 19 months of recession—and the 32 months of recovery that have happened since—consumers have adjusted their financial behaviors to reflect their new collection of economic realities.  That’s a very personal process… and might look quite different from one home to another.

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

Defining moments for the consumer

Observation:   An interview with BDO’s Stephen Wyss suggests that consumers have moved to a mindset of moderation, and that more men are doing more shopping.  See the story at Marketing Daily’s website. 

Implications:   What Mr. Wyss describes as a “defining moment” for the consumer matches up very nicely with what I’ve referred to as Reconciliation; people have taken into account that they have a different set of financial realities than they did in 2006.  But they’re not freaking out about it… they’re coping, adjusting, and making things work.

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

If everybody’s doing it, low price is no distinction

Observation:  Today’s Supermarket Guru newsletter from Phil Lempert opines that consumers have come to expect great prices everywhere they shop.  So, to point out the obvious, just having a low price does not make your company, product or service “special.”  Click here to see the story. 

Implications:  A unique selling proposition must be—before all else—unique.  When the market was flooded with discounts during our recent economic turmoil, retailers were forced to become more thoughtful and creative.  Examples?  How about free Wi-Fi in the auto dealer service department so I can work while I wait?  A list of wine pairings offered free at the grocery store where I buy fresh seafood.  Or a hands-on test drive (like the Apple store). 

 Discounting can be a race to the bottom of profit margin.  It’s what you do under the sale sticker that makes you special.

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.

$4.6 Billion in coupons redeemed last year

Observation:  This morning’s Research Brief offers another angle on a topic we wrote about a couple of weeks ago:  That coupon redemption was up more than 12% last year.  The source is listed (again) as NCH Marketing, a Valassis company.  Click here to see the complete story.

Implications:   This week, I’m preparing to talk with a major group of Chamber of Commerce organizations… so I’ve been spending significant time thinking about the current state of the economy and business.

If you weren’t paying close attention, the past thirty-one months (since the recession ended) may have felt like economic purgatory; we were no longer living through the Great Recession, but hardly felt as if we were in the glow of a Great Recovery, either.

For those who have been paying close attention, the past 2½ years have been a period of reconciliation… a term we’ve hammered on quite frequently at this site (click here to see a set of stories on the topic).  The NCH Marketing study on coupon redemption seems to support that idea; that people are sticking to spending habits and saving strategies that help them cope with a set of financial realities that are different from their pre-recession purchase priorities.

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.

Coupon use remains strong

Observation:  An article from yesterday’s Supermarket News indicates that consumers redeemed an estimated $4.6 billion in packaged goods coupons last year, up 12.2% from 2010.  The story, citing data from Valassis, explains that 27% of coupons required multiple product purchases (up 2% from 2010), and had an average face value of $1.54.  Click here to see the full story.

Implications:   The difference between a fad and a trend is much like the difference between a wave and a tide; one comes and goes quickly, and the other stays for a longer period of time.

It would seem that coupons have found favor not just as a quickly-fading fad, but that they will be an attractive incentive to consumers for a longer period of time.  More evidence that consumers continue to reconcile their purchasing behaviors, and adapt to the new realities that exist in the wake of the Great Recession.

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.

Stressed, but coping

Observation:   An interesting story in today’s USA Today suggests that consumers are stressed, but dealing with it.  In fact, an on-going study indicates that people feel their stress levels have fallen for the first time in five years.  Click here to see the full story.

Implications:   The story does not conclusively explain why people seem more “at ease” with the stress they are under, except to hint that the economy seems to be getting a bit stronger, employment prospects seem to be increasing…

And last but not least, people have been under pressure for long enough that they’re getting used to it.  (Reconciliation strikes again.  Click here to see all of the stories we’ve offered on that topic.) 

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

Home furnishings industry regains footing... and opportunities

Observation:   A recent story in the High Point Enterprise suggests that 2011 was a year of stabilization for the home furnishings industry.  While it may not be what one could call a robust recovery, 2011 saw increases in orders, shipments and employment, and that trend seems to have momentum going forward.  Click here to see the story.  HPE is a publication serving the home furnishings industry.

Implications:   Just a few years ago, it seemed like many people were buying and selling houses they same way they would trade-in their car every few years.  But that cycle was snapped, for many consumers, by the real estate meltdown.  Upside-down in their property, in terms of equity, a lot of folks have come to accept that they won’t be moving into a new-and-improved McMansion anytime soon. 

So, like many business categories, the home furnishings industry finds its customer base in a state of reconciliation.  In effect, once people accept that a new Dream Home is not in the cards, many begin taking steps to make the house they are in the home of their dreams.  From home improvements to home furnishings and accessories, they’ll be looking for ways to be happy with their current home.  Are you speaking to this new benefit… sought by so many consumers?

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

Emotion vs. Logic: Does your customer buy based on one, the other, or both?

Observation:   One marketing cliché suggests that consumers buy with emotion, and then rationalize that purchase with logic.  But today’s IPSOS newsletter includes an important perspective on that old aphorism.  Click here to see it.

Implications:   The opposite of emotion is not logic, and the opposite of logic is not emotion.  Just because people love your product or service doesn’t mean it is irrational. 

Also important… just because a consumer might be loyal to your product or service does not mean they love it.  It could be that they just don’t want to shop for an alternative because they are completely un-interested in the category or loathe the idea of shopping in the category.  They choose a product by default, sometimes, as a means to avoid the complexity of shopping at all.

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