Published on: September 18, 2012by Michael Sansolo
Earlier this summer a freak storm hit my neighborhood wrecking my roof, fence, siding and destroying virtually all the rain gutters on my house. Ten days ago another “freak” storm hit the neighborhood. A big limb came down and although we sustained no injuries or major damage, our luck didn’t improve. The limb took down the only piece of gutter that wasn’t damaged in the previous storm. Stuff just happens.
And sometimes it keeps happening.
Take a moment today to reflect on a world-changing anniversary - not September 11th anniversary, which justly gets all our attention - but September 15th.
It was on that day just four years back that Lehman Brothers failed and the global economy has never been the same.
It’s hard to remember just how bad it was four years ago, but it was. That summer gasoline prices hit levels we had never seen before as oil rose to nearly $150 per barrel (50% higher than it is today.) That summer also saw the collapse of a number of key financial institutions, but the storm came after Lehman. By the time a month passed the stock market lost nearly 30% of its value (and continued to sink for months to come.) Financial institutions fell like dominos and there seemed to be no end in sight.
This isn’t about politics though; it’s about your consumers. The Great Recession, which actually began in 2007, starting wiping out their careers and their home equity. After Lehman it took their 401ks and optimism. It’s the reason every company needs to reflect back on Sept. 15, 2008, and question what changes they’ve made to become more efficient, more effective and certainly more sensitive to customer needs.
Now think about my little storm problem and think of those same consumers because more limbs are hitting their metaphorical homes.
The Food Institute reported recently on the very real impact consumers will feel from the drought of 2012. Thanks to likely hikes in food prices the average family of four is going to spend $350 more for food in 2013. (Point of transparency: I am currently vice chairman of the board of the Food Institute.)
Now, $350 isn’t a gigantic amount, in fact, it’s only $6.75 a week. But keep in mind the pressures facing that average family. Since 2007 the net worth of the median American family has dropped by almost 40% thanks to declining home prices. And a large percentage of these families are living closer to the edge, barely getting by week to week.
For them, $6.75 per week is a problem and we know they’ll face more. As we learned back in 2008, pressures on the food supply tie closely to rising fuel prices thanks to competition for resources to make ethanol. The drought is likely to increase food and fuel prices together (and, of course, rising fuel prices raise costs in the food industry as well). That means struggling families will put even greater emphasis on value during their food-shopping trip is going to be stronger than ever.
The bottom line is the pressure will be on the industry to find ways to be even more efficient so that consumers can find the values they seek and need. Both you and your shoppers need you to be creative, sensitive and incredibly focused on finding a way to be better than ever.
In so many ways, the short time period from Sept. 7-15 is full of world changing anniversaries. On Sept. 7, 1998, Google debuted; on Sept. 11, 2001, Al Qaeda changed our view of the world; and on Sept. 15, 2008, Lehman Bros. lit fire to the economy.
All three events changed the status quo for our world, our businesses and our shoppers. So ask yourself: How have you changed? What will you change next?
The status quo isn’t an option.
The tree limbs keep falling.
Michael Sansolo can be reached via email at email@example.com . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .
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