For many businesses the fourth quarter is the make or break quarter, especially in the retail market. Many businesses will experience as much as 40% -60% of their annualized revenue in this three month period.
My question is what are you doing to prepare yourself for this Christmas quarter? I propose you think deeply and design a new strategy that will take into consideration the unusual factors we are confronting.
Here are some of the issues you may want to consider, many are obvious some are more subtle, all are important as combined this is the state of our economy.
To suggest that revenues are going to be disappointing is an understatement. I believe the typical Christmas bonanza will not occur this year.
In some instances unemployment from the closing of factories or service businesses will simply reduce the available disposable cash in the hands of those being laid off and thus there will be significantly less spending this season. At best their will be selective spending, less expensive purchases and fewer of them.
In general even if no local factories have been closed in your area, unemployment is up and many businesses are downsizing which is resulting in increased unemployment everywhere and this will transfer into less Christmas shopping…. everywhere.
Credit cards are being canceled, lines of credit reduced or canceled and many consumers relying on credit to make Christmas purchases will not have that opportunity and thus will be forced to use available cash which will result in a smaller expenditure for the season.
The cost of fuel while momentarily going down is still very high and the yet to be experienced shock of many thousands of dollars having to be spent on winter heating fuel in the colder states will eliminate a huge amount of typically available disposable income previously destined for Christmas shopping, but now hoarded for heating fuel.
The shock of the ‘crashing’ of the stock markets, has severely reduced many peoples investment and retirement portfolio values along with the reduction in home values and the elimination of already existing home equity lines of credit will reduce the desire and ability to spend lavishly this season. People will be in a funk frightened to spend, not knowing what will happen in the future.
Anticipated bonuses will evaporate. Elimination of college loans forcing parents to use other cash resources will deeply effect their spending habits this season.
Increased foreclosures will clearly reduce those involved in this debacle to spend less then normally would be expended for Christmas shopping.
The ancillary spending, going out for dinner after shopping for example, is likely to be significantly less for all the above reasons. On line shopping will increase to save gas and this will come out of the brick and mortar retail market.
Expensive luxury items will certainly be effected as many of the high paying jobs have been targeted for elimination through mergers, closings and cost reductions this year.
However the largest factor of all is the negative attitude our country is fostering about our future, our economy, the well being of our families and even our way of life, and this lack of confidence will convert to fear and spending will automatically contract as people hunker down and wait for the storm to pass.
The housing market is crashing, effecting a huge section of the work force and has a deep ripple effect into other sectors that are supported by the these markets. Auto sales are down over 30% from lack of availability of credit and lack of desire to take out such loans if they are available.
So the operative question is what are you going to do about this? It had better be a good answer as much is at stake.
Doing the same things you do every year only a little less is not the right answer. The right answer must include a plan to address these issues and design a strategy to end run the problems and somehow increase your share of a smaller pie this season as fewer dollars will be spent, the question is who is going to get them?
The answer is those who are prepared, creative, innovative and aggressively responding to the issues at hand and designing a marketing program that meets the needs of the market squarely and thus will result in a smaller decrease for your business, perhaps even an increase.
The times are changing, old methods are no longer the rule. We must all re-invent ourselves to meet the needs of the current market and that takes effort and clarity… those that do the job will not only prevail but may even grow and expand in a hugely declining and contracting market place.
Throw the old plan away…draft a new one…different, better, more efficient and with greater profitability built in.
You must do this or you risk becoming a statistic, and not a good one. Call Norm 413-549-2966 he will arrange a no obligation teleconference with me.
