The 'R' Word

It's official: the U.S. economy is in a recession, and has been for a while now -- a year, or so we've been told by the nation's leading economists. Unemployment rose again in October and November, topping 6.5% nationwide, and retailers reported the gloomiest year-over-year sales statistics in 25 years, recording a 2.8% drop in overall sales.

This tidal wave of bad news could be just the tip of the economic iceberg though; many of the more in-depth analyses and forecasts for 2009 paint an even bleaker picture, one of prolonged economic distress and high-single-digit unemployment, even, as the latest consumer price index decline (1%, largest single-month drop in 61 years) seems to hint at deflation. Ouch.

But just as volatile stock markets tend to separate the bullish from the bearish, the onset of a recession draws out both optimists and pessimists in equal measure. While the retail sector may be populated with pessimists these days, a few optimists are getting into the silver lining business, defying conventional wisdom and seeing opportunity among the storm warnings.



Forward-thinking marketers and retailers are dealing with the slowdown by enhancing their relationships with their clients and customers, and not retreating into defensive crouches. With this strategy, the optimists may well be the most capable of weathering this recession.

Many marketers and retailers -- optimists and pessimists -- are increasingly aware that the recession will affect workers, businesses and consumers for a long time to come. Credit is still so-tightly wound that any debt not regularly revolved (like a credit card) is discouraged, making capital improvements and revenue reinvestment less attractive to businesses.

Consumers are actively dissuaded from making large-ticket purchases due to the difficulty in obtaining financing- though the cascading fear pervading the economy had already depressed demand for such items, as evidenced by the retail sales decline Black Friday sales notwithstanding!

We should point out, however, that if consumers are going to ride to this economy's rescue in ways the government bailout could not, all brand marketers and retailers are going to have to maintain and bump up their relationship efforts with core customers. And they will have to do it quickly and inexpensively, utilizing direct, cost effective channels like online and mobile, and by exploring and executing innovative techniques. There's simply no other choice right now.

This year's economic unrest has underscored another reality facing retailers: the efficacy of traditional marketing tactics has waned. The generation of consumers that represents the retail sector's best hope for recovery has shunned the one-size-fits-all philosophy behind traditional advertising and marketing messages -- and uses every technological advantage available to avoid them. DVRs, targeted social network advertising, and most mobile initiatives all play to the Choice Generation, largely because they are based on opt-in methodology.

Instead of pushing a product or service to the greatest possible number of people, marketers aiming to close the Choice Generation gap are instead building relationships with a targeted group of existing customers. As it turns out, the current crisis is a becoming a proving ground for these strategies.

While the financial turmoil is real, a reversal of consumer sentiment could make this season (and 2008) a little brighter. Not much, but a little. We feel that if marketers and retailers can maintain their consumer relationships through effective marketing channels, then the retail sector might be a glimmer of hope for an economic revitalization. And we've got to have hope.

How so, you ask? Here a couple of ideas for starters.

Utilize online and other new media and technologies whenever possible, as these generally enjoy a lower incremental cost than their mass-media counterparts
The Choice Generation's media savvy is eclipsed only by its facility with technology. The economic crisis is highlighting the effectiveness of marketing initiatives, particularly among this group, which is fueling the continuation of the move away from expensive, expansive mass media advertising and marketing. This move is best exemplified by the long term rising trend in online marketing. Campaigns are becoming more targeted, direct and individual, as these are the qualities that yield the highest redemption rates, increased ROI, and overall better relationship with customers.

Forget spray-and-pray; build relationships
During a recession, the focus for many retailers is on customer retention- a move that resonates with established consumers, particularly among the Choice Generation. Instead of trying to identify and reach out to new customers during this tumultuous trading period, many retailers are -- and should be -- targeting their existing consumer base, particularly with high-touch online and emerging channel communications. These contacts are the most valuable assets a retailer can have, and they must be nurtured and developed with the same enthusiasm as new business development.

Actively seek innovative solutions
While it may seem counterintuitive to explore new strategies and solutions in the teeth of a financial crisis, the slowdown in business activity may actually present an ideal breeding ground for new ideas, the examination of existing solutions and shopping for others. This is a great time to try a new online strategy, or to explore other tactics aimed at bridging the Choice Generation gap, as many marketing specialists and other solutions providers are willing to work more competitively for your business.

Give customers what they crave: a discount
It's common-sensical: 67% of consumers are more likely to use a coupon during a recession, indicating a significant desire for discounts during hard economic times. On second thought, let's make that a significant need. And while it may not be a revolutionary statistic, it does present a receptive audience for businesses that have previously avoided discounting. If there was ever a time to tout value and real savings, it's now.

Try online and mobile couponing
Online coupons are effectively replacing print coupons, as they are almost universally more cost effective and more responsible in terms of impact. Targeted, opt-in messaging yields both quantitative and relationship-building results from the online channel. Mobile coupons have also been steadily gaining traction for years, but with the slowdown stimulating consumers' appetite for money-saving tools and the explosion of mobile phone use approaching critical mass, mCoupons could be the wave of the future. In fact, 24% of all mobile users have responded to a mobile coupon or other mobile offer in the past year. Try it and you'll see the possibilities.

Be a pragmatic optimist: prepare for the worst, but market to a resurgence
If all the analysts are correct and this season does end up being one of the softest on record, those retailers who have optimized their existing customer relationships, embraced the Choice Generation, and engaged in cost-effective marketing tactics will be best positioned. That said, retailers cannot market from a defensive crouch. This season, like others, will favor the bold and innovative.

As they have done countless times before, consumers and retailers will rise to the rescue of our incredibly complex economy. Whether this will happen by the New Year is subject to a lot of speculation, but retailers across the country should be pulling out all stops to connect with consumers at a deeper level and explore innovative marketing options aimed at bridging the Choice Generation gap.

And if these strategies prove successful, we can all be optimistic for a speedy recovery.

1 comment about "The 'R' Word ".
Check to receive email when comments are posted.
  1. Jim Dugan from PipPops LLC, December 15, 2008 at 7:21 a.m.

    Hey, we'll help. We aren't scheduled to start selling advertising on our new mobile eCoupon site until after the first of the year, but if any retailers are interested in getting on board early and taking advantage of the wave, contact us and we'll get you up immediately and let you have bragging rights for the holidays.

    GripOffs is the only advertiser supported, advertiser created, instant mobile eCoupon system in the world. Users simply go to their desired eCoupon, click to redeem and the barcode appears for instant scanning and instant savings.

    Advertisers have the ability, for the first time, to see real-time results. It's all instant. You can have your ad up and active before lunch.

    As Eric suggests, try it and you'll see the possibilities.

Next story loading loading..