Success Strategies From Past Recessionary Winners In the U.S. Retail Industry

Expert Analysis of Companies that Survived and Thrived In Economic Hardship

The U.S. retail industry has seen and survived periods of recession before, and, in fact, many companies have found a way to thrive in the midst of extreme economic hardship. By looking at past recession winners, retailers might be able to find strategies that can help them find success today.

In October, 2008 before experts were willing to officially declare that the U.S. economy was in a recession, American consumers had already formed their own expert opinions. A survey conducted by global turnaround consulting firm, AlixPartners revealed that 86% of American consumers believed that the U.S. was in a recession or depression. As a result, 64% of those surveyed said they would be spending less in retail stores to prepare for the hard economic times that 46% of them predicted would last three years.

The response to the survey from the Forrest Gump Worldwide Management Consortium was "Recession is as recession does."

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, once consumers had it their heads that recession was upon them, economic data and expert opinions no longer mattered. The fear of economic hardship actually helped create some of the difficult economic conditions. Now the conclusions of the general public are going to have to change before the realities of the recession can change in response.

Retailers would do well to acknowledge this recessionary state of mind, and figure out the best way to respond to it. The retailers who fared the best during past 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 made 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. Many American businesses have proven that the ROI for aggressive recessionary advertising can be huge and long-lasting.

Car sales will obviously slow in a recession, but car sales won't stop completely, except in the most dire economic conditions. Toyota undertands that, and has positioned itself not only to be the "official car of the 2009 recession," but also maintain its global domination afterwards.

First, Toyota is focusing on being accessible with hybrid and ultra-compact vehicles that people will want to buy now, and keep in the future. Second, the company is 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, which 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 collectively American business is just having a temporary idea problem.