Making the Most of the Economy
Stock prices are down, consumer concern is up and youre facing decisions about what to stock and how to advertise it for the rest of the year.
The tendency might be to pull back, but first consider the situation from two points of view: macroeconomics and microeconomics. In other words, the big picture and the little picture.
In the big picture, consumer confidence fell in February for the fifth consecutive month to its lowest level since June 1996. Then it rose in March as consumers began to feel better about the economy. Thats important because consumer expenditures account for two-thirds of the nations economy.
Also take into consideration the economic growth that propelled consumer confidence through the 1990s was based on the technology sector, which faltered in mid-2000 and has spiraled downward ever since. We all knew the tech sector was overvalued, so there should be no surprise it fell so far so fast. The jewelry industry also grew at an uncharacteristically high rate as the massive number of tech employees celebrated their new wealth with jewelry purchases. Now they cant, so the past few years of 15%-20% growth for the jewelry industry are over.
However, the industry sectors that supported your core jewelry customers before the tech sector became a powerhouse remain relatively strong (the main reason the Federal Reserve has been reluctant to cut interest rates too far for fear of heating up inflation).
Despite the tech sectors fall, jewelry store sales ended 2000 almost 5% ahead of 1999, says the U.S. Department of Commerce. Before 1990s, the jewelry industry considered 5% to be healthy growth.
Most economists forecast brighter days by the end of this year. Whether or not that happens, will you be ready? Take a look at the little picture: How well do you meet the needs of your customers? Are businesses in your town laying off workers or is employment steady? Do your customers carry big debt loads or does their wealth or financial prudence make that unnecessary? Have you given customers enough reasons to buy from you whether it be a necklace you know theyll love or a price/value ratio theyll appreciate? Do you project an air of confidence or do you ask for a sale apologetically? Retailers should not allow customers to perceive they are in trouble, says Donald Fletcher, president of George S. May International Co., Park Ridge, IL, a consultant to medium and small businesses. Customers respect and prefer to do business with successful people, he says. While they may feel sorry for a business that is having hard times, it is dangerous for a retailer to show its difficulties. If it does, consumers will begin taking their business elsewhere.
There will be more layoffs and more disappointing economic news to be sure. But in the end, the economys core strength remains. Your success this year depends on how you react to the economic news, how well you understand your customers and how well you meet their needs.
by Ren Miller, Executive Editor