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.  

Real estate recovery depends on: Location, location, location

Trend Observation:  A report from today’s Wall Street Journal reminds us of the old real estate adage that location is everything.  And not just in terms of the city or region where your home is located; the value of property might come right down to the neighborhood where it sits.  Evidence is mounting that the chasm between upscale areas and those facing economic challenge is only widening, as buyers are likely to pass on the most distressed neighborhoods until inventory in more desirable areas is sold out.  Click here to see the story (subscription may be required).

Marketing Implications:  Understanding the landscape around your place of business might influence your strategy for the near term, or perhaps even an extended period of time.  Are you seeing home prices rebound in your area (the trade territory in which you do business)?  Like a good dance partner, your marketing should mirror the steps of the consumers you serve.  And let them lead.

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.

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.

Why automotive seems to be trending toward an even more robust recovery

Observation:  A story from Bloomberg explains the three fundamental reasons that automotive seems to be on very solid ground right now, and moving even stronger.  Stated simply, it’s an improving economy, pent-up demand, and loosening consumer credit.  But if you like, you can click here to see the full story.

Implications:   I’m not sure this list is any different than a company in any big-ticket category might share. 

When headed into a recession, it’s important to know when to pull back on expenses.  But it might be even more important, in terms of timing, to know when to get more aggressive when it comes to marketing.

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.

Frugality fatigue drives some consumers to trade-up

Observation:   A recent story from Bloomberg suggests that consumers have had enough fiscal conservative, and they’re ready to indulge a little bit more.  The story cites research from Britt Beemer’s America’s Research Group and other sources… and you can click here to see it.

Implications:   This article correctly points out that, for most people alive today, the past four to five years have been the longest period of fiscal restraint they have ever had to place on their family budget.  While the recovery seems a bit drawn out and perhaps even still “at risk” on some fronts, some folks have had enough.  They’re ready to choose the car with a few more options, the entrée that is not on the discount menu, or the mobile phone that’s just a little bit smarter with more options.

Does your company offer a more upscale alternative?  Have you placed that product or service in a higher profile position, lately, and invited the consumer to indulge?  After all, it’s been too long… and some customers might be ready to see and hear the kind of messaging that moves them back to their favorites (instead of the cheaper alternatives they’ve been settling for over the past few years).

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

Food service returns as show- and sports-venue revenue stream

Observation:   According to a story in today’s Marketing Daily, food service has made a comeback at sports facility and other entertainment venues.  In fact, spending on food has returned to pre-recession levels at many facilities (according to the study by Packaged Facts that was cited in the article).  Click here to see the story.

Implications:   During the great recession, many consumers “traded down;” choosing less expensive alternatives to the products or services they were accustomed to.  In some categories, that may have meant going to the show or game, but bringing some snacks from home or stopping for dinner before the game. 

That in-venue food consumption has resumed its role in the entertainment experience is another indicator that consumers have gone back to abnormal.

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.

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.

Furniture sales on the rise (again) in February

Observation:   A story in Crain’s New York yesterday indicated that sales in the home furnishings category are really taking-off nicely.  Click here to see the story.

Implications:   In recent Audience DNA research workshops, I’ve encouraged marketing professionals to stop thinking about “Adults 25-54” or “Women 18-49” as their target audience.   People don’t buy furniture just because they’re a particular age.  Their purchases are often influenced by the length of residence in their current home, and the extent to which they plan to stay there.

The foreclosure crisis created a whole new segment of renters; when someone moves from a house to an apartment, the McMansion-sized furniture often won’t fit.  Families who fall into this group often have up to a year to plan, however, so they sell the old stuff on Craigslist and save up some cash to outfit their new dwelling.

There’s a growing number of folks who are not victims of the real estate meltdown… but beneficiaries of it.  They’re swooping in to upgrade to a new home while there are still lots of great deals on houses out there.  New house = new furniture. 

As much press as was given to foreclosures, there is an even larger number of people who purchased their home at the peak of the real estate bubble are now up-side-down.  They’re not at risk of foreclosure, but they are unlikely to flip their current house and move into a new dream home anytime soon.  So they’re doing things to make this house the home of their dreams.  Alas, new home furnishings and home improvements can be a part of their plan.

Finally, folks who’ve been in their current home for eight to ten years or more are simply eager to do an upgrade.  Their current home furnishings look dated or worn, so they’re likely to welcome any new ideas that give their house a fresh new look and greater functionality.

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

The dumb bell economy hits the food aisle

Observation:   This morning’s newsletter from Phil Lempert explains that food retailers have their own version of the “haves” and “have-nots” landscape.  He divides consumer sentiment into the two groups of pessimistic and optimistic.  The latter group is feeling better about the economy, more likely to try new products and experiences, and indulge a little more freely.  Pessimists might be more likely to change retail channels frequently (going from grocery stores to club, discount and dollar stores), clipping coupons more religiously, and taking extreme measures to maintain a frugal lifestyle.  Click here to see the story.

Implications:   I’ve written pretty extensively about the Dumb Bell Economy, and you can review those past stories by clicking here.  This Phil Lempert piece does a good job of reminding us that—just as was the case with the recession—the economic recovery is a very personal thing, and might look drastically different from one household to the next.

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.

A good number to end the week with: 227,000

Observation:   The jobless report published today indicates 227,000 jobs added to the U.S. economy last month, which was better than expected.  Click here to read the Washington Post version of the complete story.

Implications: More jobs = more consumers with paychecks.  It is always nice to end a week on a positive note; in times like these, it's important to amplify the optimistic.

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

Men join the recovery in apparel spending

Observation:   A story in yesterday’s New York Times explains that men are spending more than ever on fashion accessories.  But perhaps more importantly, it points out unemployment and other recessionary issues impacted men differently than women.  Click here to see the story.

Implications:   It’s good to see men back spending again, and especially on themselves.  Both male and female heads-of-household delayed personal spending during the recent 2007-2009 recession… opting to support the needs of their family first.  Indulging a little more—or updating one’s wardrobe—might be another indication that the recovery and consumer confidence gaining a little momentum.

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

Temporary staffing appears robust

Observation:   A posting from the AMEX Open Forum blog this morning suggests that temporary employment is picking up across the U.S.  The story is informed by Stephen Berchem, president of the American Staffing Association.  Click here to see it.

Implications:   The reason Temp Staffing is an important benchmark, of course, is that it serves as a canary in the coal mine; temporary workers are among the first cut going into a bad economy, and among the first hired when an economy is picking-up steam.  (Companies can add employee firepower on an as-needed, or contingency, basis.  That allows them to wade toward increased capacity without diving into higher expenses, and getting in over their head.) 

Who cares?  Anyone who sells anything.  Paychecks are the prerequisite to purchasing… it’s that simple.  In the aftermath of the recession that ended in June, 2009, many employees were looking for two or more lower-paying jobs to replace the career position that they had lost.  A temporary staffing spike gives those people more options, as well as an entrée into new companies and career opportunities.  Further, it is a signal that overall employment can be expected to gain momentum.

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.

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.