Who’s ready? Treasury yields have dropped, economic growth slowed in 2019, and freight shipments have tapered off. A recession is coming although no one can really say when it will occur. History shows that recessions occur about once every six years and last, on average, nearly two years. Now, a survey by the National Association for Business Economics reports that 43% of the economists it polled believe there will be a recession by the end of this year, 66% believe it’ll start by mid-2021. What is known is that the last recession in the U.S. began in December 2007 and ended in June 2009.
So Why Not Just Wait?
Preparing for the inevitable takes time and effort, and not knowing when a recession will occur is no reason not to be ready because the consequences of being unprepared can be costly. Eliminating and/or minimizing predictable challenges can save a lot of scrambling around, as well as turmoil.
Customers are Number One
The primary focus in preparing must be toward the consumer. During recessions, many customers make big changes in their spending habits. This includes everything from substituting lower-priced brands over favored, and to seek out cheaper replacements. Luxury shopping is not on many shoppers’ lists. Similarly, people will be preparing more meals at home instead of eating out. Some will cut back on costs like entertainment, whether it’s movies or pay-per-view channels, and others will cancel or reduce travel plans.
The Bottom Line
The main aim of consumers will be to trim costs. Companies will be wise to plan on the same and have cost-cutting procedures ready to go when the recession hits. Advertising budgets reflected reductions in customer spending and dropped 13% in the last recession. Company actions should also be shared with employees to foster better understanding and cooperation.
Besides restaurants, other companies such as fitness centers and car washes are also hit hard during recessions. Building value beforehand, especially on health values and fitness trainer relationships at the gym can be helpful in reducing the exodus.
Companies that acknowledge, empathize with, and recognize the shift in consumer behavior and concerns will foster confidence and trust during hard times. Tips on wise shopping and cost-cutting advice will go a long way.
Marketers are always striving for catchy ads and slogans and nothing offers as big a challenge as a recession. Consider novel promotions but be aware that even those don’t last long. In the 2008 recession, Starbucks attracted a million customers simply by offering a free pastry with the purchase of any coffee.
Some companies can actually increase market share if they’re in tune with consumer feelings and concerns. Using the same tools on Facebook and Google Ads Customer Match can identify customer look-a-likes to build the base. Paying attention to good customer experiences and customer service also helps.
Brands that have higher prices may need to look at creative ways to finance sales. Might the bank through whom the company offers credit cards collaborate on a deal to reduce interest and waive or postpone fees for a certain length of time?
As Benjamin Franklin once said, “An ounce of prevention Is worth a pound of cure.”