The Recession “Spoof”
As the recession really took hold, I thought retail sales in spring 2009 would be much more negative. But based on numerous discussions, industry articles and blogs, these categories seemed to enjoy a healthy spring. We could end the story there and sign off on spring 2009, but I think that’s too simple. There are important lessons to remember as we look forward.
Consumers’ priorities changed. Based on the sudden and drastic changes in most people’s economic situations, this wasn’t too hard to predict. This meant more vegetable gardening to save money and purchasing flowers as part of the “staycation” craze.
Growers and retailers adjusted. While many forecasted that consumers would stay home more and help the lawn and garden category, most also assumed consumers might cut back on their average spend. Through changes in container sizes and packaging, consumers saw more attractive price points, and adjusted product mixes skewed toward lower price points.
National retailers got aggressive in marketing. Television and radio spots advertising the industry reappeared after all but vanishing the past several years. With sales down drastically in other categories, stores saw the opportunity and pursued it.
Disposable income matters. Compared to 2008, retail gasoline prices were down an average of 38-40 percent throughout March, April and May, according to the Energy Information Administration. This was a bright spot that I contend influenced purchases.
The weather does matter. Most regions of the market experienced weather patterns conducive to more shopping and gardening. Survey after survey suggests that weather is the most important factor in driving short term consumer purchasing behavior within this category.
All five of the points outlined came together in such a way to provide success for growers and retailers alike, but the results could very well have been quite different.
Saying the industry is recession proof turns a blind eye to these and many other smaller factors that made the spring season a success. As much as anything, this year showed that with proper attention and responses, growers and retailers can manage their way through a recession.
Lessons and Reactions for 2010 and Beyond
So, now what needs to be done?
Capitalize on the increased consumer traffic from 2009. We should make every effort to bring customers back into the stores in fall and during the holiday seasons, through e-mail, direct mail, radio and TV. That should lead right into spring 2010: Don’t let people turn their attention elsewhere. Other industries that didn’t fare as well will try to shift consumers’ priorities.
Keep product fresh and stay relevant to customers. Consumers who return will be looking for what’s new, and they will grade retailers and suppliers alike on service and convenience. It would be a huge mistake to repeat product offerings from 2009.
Understand that changes in customer priorities may not always be evident. But it will still be critical to know these changes are happening.
I recently reread a strategic planning book by Rodolfo “Rody” Salas called Prioritize ‘Til it Hurts: Discovering and Unleashing Your Best Opportunities. Here are two important messages it conveys: “Organizational misalignment always begins with a change in the marketplace that went unnoticed by us,” and “There is always new news. If unfolding events catch us by surprise, we are likely to miss opportunities and suffer the consequences.”
You would have had to be in a coma not to notice the marketplace change in 2009. Economic recovery will also change the marketplace and the consumer priorities.
Will we be ready to respond to the next change as we did this past year?