Feeling the pinch of less income or revenues yet? If you aren’t, then you’re a rare bird. In these tough times, food costs are rising as are gas prices, and we’ve reached the point where it’s starting to impact consumer purchasing habits.
In an article on cnn.com, economic issues now ripple across the entire world, thanks to a global economy.
The article states: “What’s rare is that the spikes are hitting all major foods in most countries at once. Food prices rose 4 percent in the U.S. last year, the highest rise since 1990, and are expected to climb as much again this year, according to the U.S. Department of Agriculture.”
“Meanwhile, record oil prices have boosted the cost of fertilizer and freight for bulk commodities — up 80 percent in 2007 over 2006. The oil spike has also turned up the pressure for countries to switch to biofuels, which the FAO says will drive up the cost of corn, sugar and soybeans ‘for many more years to come.'”
THE REAL WORLD RETAILING
We’re at a very interesting time in our economy, the likes of which we’ve never seen before. Globalization, while a good thing from an exporting and cheap goods perspective, also can come back and bite us.
The current economic downturn coupled with the growing hunger of developing countries like India and China are going to change the economic landscape forever.
In the current economic downturn, consumers will be in a trading up mode more than ever. That is, they may not drive as much so they can afford their $50 tube of anti-wrinkle cream. Or they may eat out less in the next six months in order to buy that new flat screen TV.
Having worked in the beauty business in the early 2000’s when we were in another economic downturn, we learned that women bought more lipstick because they still wanted to feel good about how they looked and were willing to spend a few bucks on a tube of lipstick (and spend they did, in numbers that the company I was working for hadn’t ever achieved in lipstick sales).
Spending by consumers isn’t going to go away, it’s just going to transform and morph. So you’ve got to be nimble and ride the wave as consumers continue to buy things to make them feel good while they give up things that aren’t as important.
The global economy will have an impact on retail today and in the future. The key is to remain flexible. It’s a bit like surfing. There are big waves, medium waves and small waves. Good surfers learn how to surf all waves, and constantly challenge themselves to attempt the bigger and bigger waves. As a retailer, you have to learn how to surf the waves that are thrown at you.
How are you maneuvering through the waves?