The housing market and employment levels are among the biggest factors economists monitor to get a fix on the state of the economy. Overall retail sales is the other major bellwether, particularly as we head into the fall and holiday seasons. At this point, it's tough to get overly optimistic about an economic recovery for 2009. But amidst the negatives, there are some positive signs on the horizon worth tracking and reacting to.
- There's been an uptick in home sales in recent months as prices plunged. In June, for instance, new home sales increased 11 percent while the number of new homes on the market decreased.
- Although unemployment is still rising and is expected to pass 10 percent early next year, the job-loss rate has slowed considerably as more employers apparently have cut staff as close to the bone as possible.
- As for the fall/holiday season, it would be surprising to see a sudden surge in consumer spending again; sales levels likely will be flat. Consumers are still struggling with lower wages, unemployment and a lack of confidence. So they'll be in no position to spend very much on gifts.
Not Setting the Table
What's more, with store closings up, catalog mailings down, and online advertising and web development spending levels flat for the first time in the internet age, integrated retailers who rely primarily on stores, catalogs or the web for the bulk of their sales aren't setting particularly lucrative or attractive tables for consumers. There are fewer avenues in which to shop, and less unique merchandise out there.
But here are the flip sides: A possible sales driver is that everything's marked down. And with all the cost cutting going on, marketers' profit levels should kick up a notch. That'll likely leave you in a better position for a turnaround early next year. It could — and in theory should — lead to new hiring initiatives, useful technology investments and better merchandise offerings, all of which could spur greater consumer spending.
For larger marketers able to weather another mostly forgettable fall/holiday season, it's a great time to plan ahead for 2010. Try to invest in online initiatives and increase catalog and other direct mail contact with customers and prospects. If you manage a store chain, seek out available retail properties that can be had on the cheap. All are worth pursuing now if you have the capital to do so.
On the other hand, smaller, undercapitalized marketers who are hanging on by a thread right now either have to pull out all the stops to survive or look for buyers or investors. There could be a light shining come early 2010, but the challenge of making it there in one piece begins right now.