A Moving Target
April 7, 2008,
In uncertain economic times, it's hard not to go into a defensive crouch.
It's important to remember that even when everyone in the daisy chain appears to be holding their collective breath, life goes on. The consumer, however unsettled, is what she always has been: a moving target.
When her tax refund arrives in the mail, she's probably not going to run off to the mall this year. She's going to bank part of it and pay down some bills. If her family qualifies for one of the government's upcoming economic stimulus checks, she's likely to do the same.
She's going to cut her discretionary spending for a while and try to put a little more into savings. After several years of shopping 'til she dropped, she's going to be a lot pickier. She's going to focus on needs, particularly items that benefit her family's health and safety.
She's going to favor products that are in sync with the times — and her anxieties.
That big, fat SUV she fell in love with a couple of years ago? Now, not so much. Chrysler, Ford and GM in February each posted double-digit sales declines, according to Edmunds research. Honda, Nissan and Toyota each recorded low single-digit sales gains.
And one day, when the wheel turns and her personal economic situation is looking more hopeful (later this year? early next year? mid-2009?) she's going to come bursting out of the gate with a lot of pent-up buying desire and, probably, a less heavily encumbered credit load.
At each step along the way, somebody will be out there with a solution for her. That holds true regardless of whether she's shopping at Family Dollar or at Pottery Barn.
We're going to need all the smart solutions we can get over the next three or four quarters. When the game gets rough, you absolutely need a good defensive position, but you also need a mighty offensive strategy to push yourself ahead of the competition.