I met with a client a couple of weeks ago. This is the classic self made man who has chased and caught the American Dream. Always the glass half full kind of guy he told me that the average family would make 25% less when this recession was over.
He went on to talk about globalism and what its done to wages and wage growth, the fact that GDP would be smaller when this is over, that double digit unemployment would result in families only having one income instead of two in some cases or replacing full time employment with part time, lower commission earnings for many and on and on.
While you can argue effectively against the finite number the concept of lower real earnings is not in dispute. The result will be a value driven consumer that declines to purchase a number of items going forward.
For example, car sales have dropped by 40% and will only partially rebound as many consumers realize they can do without a new car every X number of years, outboard motor sales are off 50% over the last 4 years and will probably not recover fully, why would anyone build a new home that costs $115 sq.ft. to build when they can buy a home on the market for $80 sq.ft.
All of these “facts” lead me to believe we are in for a revolution of sorts in marketing. The businesses that survive will focus on growing market share because the overall pie is smaller and to grow you must “steal” market share from competition.
There are a number of effective strategies for growth in a down market.
But more important than a strategy is a CEO that has come to grips with reality. There are three kinds of CEOs today: Those in denial, Those in a panic and those looking to develop a plan.
It’s tough to help the first two but the third is where everyone needs to get in a hurry.
Tomorrow, developing a plan for a new consumer in a new economy and why the old roadmap won’t work.
