The New York Times reported over the weekend that just as US consumers have managed to soldier on effectively in keeping the economy cooking the last few years, “there are growing signs that the soldiers are battle-weary and retreating from the field.”
The scenario is like this. Corporations have stopped spending. Which means that consumers are not spending, either because they are cautious in the current environment or actually have less money to spend. Consumer debt is near record highs, which also is expected to slow down spending.
Richard D. Hastings, chief economist at Cyber Business Credit, a retail advisory firm in New York, tells the NYT that “he believes that because prices are no longer dropping for raw materials — and are even rising for some, like oil and cotton — shoppers may start seeing higher prices on goods. Accustomed as they are to ever-bigger bargains,” which is likely to slow down spending.
In addition, according to Hastings, the mortgage refinancings, home equity loans and falling retail prices that often provided the money that consumers spent so freely no longer can be counted on.
The big problem is that if consumers stop spending, there doesn’t seem to be another candidate to pick up the slack.
The scenario is like this. Corporations have stopped spending. Which means that consumers are not spending, either because they are cautious in the current environment or actually have less money to spend. Consumer debt is near record highs, which also is expected to slow down spending.
Richard D. Hastings, chief economist at Cyber Business Credit, a retail advisory firm in New York, tells the NYT that “he believes that because prices are no longer dropping for raw materials — and are even rising for some, like oil and cotton — shoppers may start seeing higher prices on goods. Accustomed as they are to ever-bigger bargains,” which is likely to slow down spending.
In addition, according to Hastings, the mortgage refinancings, home equity loans and falling retail prices that often provided the money that consumers spent so freely no longer can be counted on.
The big problem is that if consumers stop spending, there doesn’t seem to be another candidate to pick up the slack.
- KC's View:
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It seems to us that many retailers need to resist the immediate urge to say that reduced consumer spending means that people will only be buying cheap and convenient food. We think that consumers over the past decade or so have gotten used to the idea of being at least a little self-indulgent…and that retailers who figure out how to appeal to this impulse will be real winners.
It won’t be easy.
But hell, we think that in the current environment, retailers need to be more creative, more imaginative, more resourceful -- not just more efficient.
That’s why we think that “52” may be the magic number. Because it is the number of new ideas that every retailer needs to have in any given year. Some will be big ideas, some will be small. But they will relate not to cutting costs, but to developing new products and services, building community between shopkeeper and shopper,
Fifty-two a year. Minimum.
More on this concept to come…
