When consumers are feeling spunky, they are ready to open their wallets and consume. But when economic conditions put them into a funk instead, they are going to let pessimism rule the day and use their cash to pay off debt or save it for the rainy day they see on the horizon. Not good news for retail outlets, says BIGresearch.
Looking at the immediate future of the retail business, BIGresearch said, “Consumer confidence in the economy is off and layoff expectations are up, factors that appear to be contributing to a less-than-stellar projection for same stores sales growth in April and May, according to the latest ForecastIQ® (a service from Prosper Technologies™). There seems to be an Easter bounce, but no indication of substantial recovery. And with the soft market, higher grocery and gas prices could dampen any modest progress.”
According to BIGrearch analysis, the categories on the extremes are the least likely to be hurt by the slump. High end retailers, who market to those consumers least likely to be having a crisis of confidence, won’t have a problem. And discounters will benefit from the rest of the consumers who feel the need to pinch pennies.
That means the brunt of the damage will be felt by the retailers in the middle.
RBR-TVBR observation: When down times hit, bold advertisers have a chance to dominate the airwaves while the more cautious hunker down. The benefits of advertising against an economic trend are two: The bold advertiser will have a bigger share of what consumer foot traffic there is, and the establishment of dominance during the down time often translates to continued dominance when good times return.
That’s what you have to sell in a recession. It’s something to keep in mind even if this latest valley is shallow and short-lived.