All economic indicators show that we are now beginning to recover from three years of growing unemployment and public discontent as well as shrinking investment portfolios and consumer spending.
Or are we?
While we are beginning to see more job creation, we’re not seeing a drop in the unemployment rate. Why? Because that rate is determined in large part by the number of people filing for unemployment. Therefore, while companies are starting to hire again, more people who have been unemployed or underemployed are only now beginning to file for unemployment benefits, thus balancing out the job growth.
Though, we should still be very pleased with the recent trend in job creation. The U.S. netted an additional 162,000 jobs in March.
What is an interesting contradiction to this trend however, is that even though we’re starting to see signs that the recession is receding, consumers who have been badly burned by the economic downturn, do not seem likely to revert to "pre-recession" spending habits anytime soon.
A recent article in the Sun Herald by Jeannine Aversa and Bernard Condon said, “In the AP’s new quarterly survey, a majority of economists agreed that a new frugality will persist even as the recovery gains firmer footing.”
While this isn’t actually eye opening, as I’ve read this prediction several times before; what I find compelling is that… I’ve read this prediction several times before! These findings aren’t an anomaly. They are very consistent with other studies.
The questions this forecast creates in my mind as a marketer are: How will it impact hiring in the marketing sector? And, how will continued consumer frugality impact product development and marketing strategy over the next several years?
I believe that smart businesses will continue to focus on product integrity and ensuring they don’t abandon their primary market segments…even if they are a luxury brand. Once a company loses sight of its brand essence and core customer, kiss it goodbye.
However, that doesn’t mean that even a luxury brand can’t consider more value based messaging. After all, a luxury brand is typically more expensive because of its quality. And higher quality equates to greater value.
I also think that smart businesses will grow their marketing investments in an aggressive approach to the evolving economic landscape. Confronting today’s unique marketing challenges with inexperienced marketers, in an effort to save money, would be a huge mistake.
That being said, today might be a good time to consider buying a few shares of stock in TJX Companies, owners of TJ Maxx. Too bad Goodwill and the Salvation Army aren’t publicly traded.
