While there are many economic indicators that signal recession, the best indicator is probably people's attitudes. If consumers think there is a recession, then they will participate in behaviors that actually cause things to recess. So, today we have statistical proof that consumers are in a recession state of mind. Good to know.
It is what it is, and the general public is probably not going to be talked out of its own conclusions any time soon. Retailers would do well to acknowledge the recessionary state of mind, and figure out the best way to respond to it. The retailers who fared the best during recent periods of recession are the ones who didn't try to fight or resist what they didn't like, but rather found a way to work with it.
In response to people's spending cutbacks during the 70's recession, Chrysler introduced rebates, Charles Schwab offered discount commissions, banks introduced interest-bearing checking accounts, and supermarkets began accepting credit cards. All were appropriate offers for the times. All are good offers that lived beyond the recession. The companies that invented and employed these recessionary response strategies fared well with them.
Ivory Soap created soap operas, and Kellogg's sponsored Admiral Richard E. Byrd's South Pole Expedition during the Great Depression. During the 1989-91 recession, Pizza Hut sales increased by 71% with Pizza Hut Pete and a $3.14 million advertising budget. Taco Bell ran to the border with a 40% sales increase when it advertised its 59-79-99 value menu during that same time period. These winning companies didn't shrink their visibility to coincide with the shrinking economy. They took bold moves that helped them capture attention, capture market share, and capture a brand dominance that they've been able to build on ever since.
Car sales will slow, but car sales aren't going to stop altogether in tough economic times. Toyota undertands that, and is positioning itself not only to be the "official car of the 2009 recession," but also maintain its global domination afterwards. First, it's focusing on being accessible with hybrid and ultra-compact vehicles that people will want to buy now, and keep in the future. Second, it's focusing on being affordable by involving suppliers in the design process to save an estimated $10 billion. Third, it's focusing on being cooperative by giving free efficiency consulting to its own suppliers. The suppliers cut costs, pass the savings onto Toyota, who can, in turn, give its customers a break.
When money is moving freely, retailers don't have to be all that creative to get their share of it. But when money is slow flowing, it's not enough to just show up. History shows that the retailers who survive economic setbacks are the ones who get inventive, get resourceful, and get noticed.
Perhaps it's not so much a recession problem that the retail industry is struggling with right now. Perhaps we all just have a temporary idea problem.