Editors Take: 2010 Recovery Requires New Thinking
Did you hear what went down in the most recent “board of buyers” meeting? Here’s an excerpt:
Do I need this thing?
Yeah, sort of.
Do I really need it?
Well … I could use it and, darn it, I deserve it.
Do I truly need it?
Nehhh ... forget it.
These days, decisions on all sorts of purchases go through many consumers’ personal “boards of buyers,” sort of a shopping version of the id, ego and superego. This imaginary board consists of the assorted moods we’ve all developed this year to stomach the economic bad and keep afloat financially.
If we’re fortunate enough to enjoy the recovery in 2010 that economists are promising (albeit with much hedging), then next year is going to be drastically different from 2009. This year has, in turn, been quite different from 2008.
About the only good thing one can say about last year is that all types of retailers had enough advance notice during the fourth quarter to plan ultraconservatively for 2009. With consumers balking at spending much of anything this year, about the only thing marketers could do was get themselves into good enough shape to avoid going bankrupt. So they slashed costs, laid off staff, trimmed inventories and have continued to wait out this deep freeze.
The exceptions have been Wal-Mart, Amazon.com, The TJX Cos. and a few others. Otherwise, just about anything not marked down accumulated dust in fulfillment centers or on store counters.
Consumers Rule More Than Ever
Meanwhile, as consumers held back, they got a whole lot wiser about how the retail game is played. If retailers, catalog marketers and to a lesser extent online merchants (notwithstanding Amazon.com) were running the merchandise-selling game all along, the rules changed this year. Meet the new boss — quite different from the old boss.
Consumers have gained greater ability to interact with one another’s boards of buyers in the form of product reviews, broader search capabilities (for the lowest price and/or best value) and, of course, the hot social media sites. It wasn’t that any of these options were brand-spankin’ new this year; it’s that their credibility shot through the roof.
But as we head into the home stretch of the holiday shopping season, we’re nearing another significant turning point: Consumers will either decide they’re ready to spend more lavishly on gifts again or, well … we won’t go into that other possibility.
I’m guessing there’ll be some improvement over 4Q ’08, but nothing drastic. There are too many out-of-work people out there, and too many others still afraid to disband their boards of buyers.
Regardless of how robust or soft this holiday season turns out, I do believe that next year, once the unemployment rate tops out and people get back to work, consumers will start buying again. They might even break up their buyer boards. But will this signify a return to normal? Hardly.
Consumers will continue to seek the lowest prices online. They’ll still demand value. And they’ll keep reading product reviews while communicating with one another through social media, texting and other online ways, some of which probably haven’t been invented yet.
The New Consumer Mind-set
Ryan Deutsch, vice president of strategic services and market development for StrongMail Systems, wrote a recent article for one of the e-newsletters put out by our sister publication, eM+C, where he said, “The social web is here to stay. Consumers will continue to turn to a variety of ‘influencers’ within their social networks when making purchase decisions.”
Marketers dependent on catalogs will be able to bump up their circulations a little, if they can afford it — perhaps even for prospecting if there are any good names left. Retailers will be able to open new stores. But it’ll take a whole new way of communicating to get consumers to buy from you.
That way is still being formulated, but it’ll be different because the consumer is in charge now, regardless. So if you’re eyeing a time of economic recovery in just a few months, don’t expect more of the same tried-and-true catalogs or cookie-cutter stores to draw a trove of sales. There’s a lot more work and research ahead.