Redmarketer

November 13, 2008

When It Reigns, It Poors: The Economy

Filed under: Marketing Tactics — Robert John Ed @ 4:38 am

There are some extremely big issues at hand today for people all over the world.  We see it in our back yards for once and it’s a little easier to understand.  For me, this is easily the worst state I’ve ever seen our economy and it holds some serious implications.

First off, in terms of marketing, consumption is down for the first time in a LONG time.  When people are consuming less, near everything you can think of is affected.  The first big companies to take hits have been retail stores.  They’ve been down around 10% over the last few months (except Walmart) and it’s an incredibly crucial time for these chains:  Christmas.  What can marketers do?  Well, coupons have taken off in the last few months, which would be expected.  But FSI’s only get you so far.  Under normal circumstances, the holiday season provides retailers with huge amounts of traffic and sales.  This year will be markedly different.  Retailers are quite worried, and should be.  Walmart will continue to do well because Mom simply won’t cancel Christmas; she will cut costs wherever she can though.  So for the rest of the lot that don’t have a brand synonymous with the lowest prices on earth, fighting for the traffic will probably come down to tremendous price slashing on door busters in order to attain corollary sales.  Keep an eye on what retailers do over the next few months.  Earnings projections are down (locally, Best Buy this morning…33%) and how they market will be telling of long term strategy and potentially short term alterations.

The sad part is that this is only the tip of the iceberg.  The ongoing housing crunch that’s leaving many homeless and many more in underwater mortgages is severely devastating on many levels.  Obviously people losing their homes and not being able to build value is painful, but the effects go far beyond.  The ability to attain loans for small business entrepreneurs (BTW these are the people that make America great, they are the ones that build businesses and provide jobs to the masses), potential homeowners, students of all kinds and others is only heightening in difficulty.  Credit is tightening up in loans and credit cards so much that government has had to urge them to remember why they are being given bailouts in the first place.

What else?  Well, there are many things, but the looming potential demise of the automakers is scary.  I mean really scary for all of the US.  GM, Chrysler and Ford are all particularly troubling, but GM has snowballed incredibly down the mountain and will soon be melting in Hell.  Watch for another bailout, it’s coming.  The automakers have been “the backbone” (via PE Obama) of our manufacturing output for a long time, and the job losses and additional effects of any of these companies filing bankruptcy would be the in similitude to a boulder dropping into a pond.  You honestly can’t predict the outcome, so you protect against the impact.

These issues are hardly the end all and be all of where we are.  I happen to read about these things every day, so they seem quite indicative of the state we are in.  Unemployment is at 6.5% due to companies tightening their belts and that number will rise.  It’s sad to know how many people are losing their jobs before the holidays.

The odd thing?  I’m actually very optimistic about the situation.  There are some large changes in store for the States.  We have a new president and a populace filled with hard working great minds.  I work with some of the brightest people in the country every day and I can attest that the next generation of business leaders will not be lacking the necessary hard work, ethics or intelligence to lead America throughout the new age.  Everything is cyclical (see: my favorite book). We will break out of this slump the same way we built ourselves up, by our bootstraps.

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2 Comments »

  1. Nice post man. You’re right, all we can do is try to stay positive — it is cyclical but it will take some time. I know our sales are way down and initially I thought we would survive given how upscale/affluent our target market is but they’re probably the ones losing a lot more in the (stock) market than most of us so the pinch is indeed impacting everyone (globally).

    Comment by Taj Bolton — November 13, 2008 @ 3:20 pm

  2. Thanks Taj. I’ve been thinking a lot about this stuff lately, I just can’t find time to write. It’s pretty incredible to watch how all of these events affect one another in compounding fashions. I do think everything and everyone will be fine, it will just take time and hard work. Restoring confidence should be on the radars of marketers everywhere.

    Comment by Robert John Ed — November 13, 2008 @ 4:00 pm


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