Spending habits have changed – how will it affect your business?
The past 18 months (2008-2009) has yielded a steep drop in consumer spending.
Gallup is one of the best resources on the state of business in the United States and they recently released a report on the spending habits of consumers in the US:
Please read entire article. It’s well worth the 5 minutes…
In a sign that the new normal in consumer spending continues unabated, upper-income Americans’ self-reported average daily spending in stores, restaurants, gas stations, and online fell 14% in November, reverting to its relatively tight ($107 to $121) pre-October 2009 average monthly range. Middle- and lower-income consumer discretionary spending increased by 7% last month but remained in its tight 2009 average monthly range of $52 to $61. Still, consumer spending by both income groups continues to trail year-ago levels by 20%, even as those comparables have gotten easier to match — possibly dashing hopes that upscale retailers and big-ticket-item sales will do better this year.
Fall 2008 was a difficult season for businesses that became depending on the level of spending (including credit spending) taking place in the bubble economy of 2002-2007. All of 2009 hasn’t been much better and Fall 2009 seems to have been flat or below 2008.
Looking ahead to 2010, there are signs of a flattening or worsening economy and the impact this may have on the hunting industry may be great. There is a potential threat of increasing license fees and taxes on hunting related items as many states scramble to make up for lost income revenue. Consumers are also cutting back their spending to pay down debt and save for an uncertain future.
That isn’t to say there is nothing you can’t do to prepare for your own prosperous 2010.
Let’s take a deeper look at the new normal economy for 2010, the impact it will have on your business and the hunting industry, and things you can do now to position yourself for success…
The New Normal Hunting Economy
The current state of the US economy has two realities:
1| 2002-2007 was a false boom economy where business and spending took place that wouldn’t have occurred in a normal market
2| 2009 and beyond will see consumers saving the money they are still able to earn while using it to pay off debt they incurred in 2002-2007 and/or to save for an uncertain future
For hunting businesses, money is tight for individuals and for businesses that have seemingly had money to spend on what may have been nice-to-have activities such as hunting in the past 5-6 years. In 2009, consumers cut back on their discretionary spending including items that may include guided hunting trips, a new bow, or a new camo suit. Some of these items have lost their appeal as customers became uncomfortable with their debt situation, especially as it related to the deflating of the housing and building sector.
While 2008 and 2009 were difficult for the hunting industry, there is hope for companies that are willing to take a step back, look for an understanding of the new normal hunting economy, and take action to provide targeted hunting customers with valuable products and services as they continue to pursue their passions in the outdoors.
5 Things You Can Do in 2010
2010 appears to bring a year of uncertainty for businesses as they try to figure out the best way to serve the needs and wants of consumers in the new normal economy. It’s often said that the more consumers save and pay down debt the worse the economy will be. While this may be true for the short-term, it’s best for the economy as a whole and for individual businesses if consumers pay down debt and save for long-term prosperity.
In 2010, consumers will still look to spend on leisure, especially for the things they value most as enjoyment. Hunters that are extremely passionate about hunting and the outdoors will still spend their hard-earned money on trips, gear, and knowledge.
The key to the new normal economy is for businesses to understand that the most passionate customers will be the ones spending their money and they will want the highest quality product and service that serves their hunting needs in the long-term.
1| Reassess Costs
After a false boom period like there was in the US economy from 2002-2007, it’s best to use the correction period to reassess investments made during the boom and make sure that investment is going to true growth areas of the business rather than into areas of false growth.
Like a local business that sees false growth when the circus comes to town, businesses today have to understand that there was a lot of demand in the economy (2002-2007) that was based on an abnormal appetite for debt. As this appetite for debt restructures, businesses need to assess costs and determine where to invest and divest.
2| Analyze Existing Customers
Along with assessing current costs comes the importance of analyzing where your company’s most passionate demand originates.
Some customers you may have acquired during years past may have been your customers due only to false demand for your products and services.
However, you also likely acquired some customers who are extremely passionate about you, your business, and the products and services you provide. It’s these customers that you will want to focus your attention on in 2010.
What will best serve your most passionate customers?
How do you acquire more passionate customers in 2010?
3| Improve Customers-Business Connection
After determining your most passionate customers it’s time to work on improving the connection you and your business have with that customer.
Today there are many ways to increase the value in the connection you have with your passionate customer. These ways include long-term strategies such as email newsletters, blogging, video, and sharing information that improves the value of the product and service you provide your customer.
Improving the value of the customer-business connection is a long-term process with little things you can do each day to work toward a successful customer connection strategy.
What are you doing today that will grow your connection over time with your passionate customers?
4| Improve Your Weaknesses/Improve Your Strengths
As mentioned above, a correction is the perfect time for you to assess your costs, customers and ultimately your strengths and weaknesses.
Now is the time to improve on your weaknesses and on your strengths so you can best compete for your most passionate customers. As is evident today, consumers are pickier with their decisions. To retain your most passionate customers and to acquire new customers you’re going to have to improve the areas of your businesses that are behind your competitors as well as on the areas you excel. This will ensure that you stay ahead of the competition and provide the most value for passionate customers.
After all the assessing and reassessing of your company and customer is in place, it’s time to look for areas of opportunity to expand.
A business that is growing is succeeding and companies that remain complacent with their current state of affairs will soon be left in the dust as competitors expand and improve their products and services.
Where are areas that you can expand?
Are there products you can offer that allow you to use your current set of expertise to provide value to your passionate customers?
Successful hunting businesses will have no problem adjusting to the new normal hunting economy. In periods of correction the businesses that best provide quality and customer service will survive as consumers reassess their spending and look for quality in all they work for.
Periods of correction in a productive and consumer economy are exactly that – a correction. As consumers correct their saving and spending habits, businesses must do the same and assess priorities as it relates to offering the most value to consumers.
In 2010, the best strategy for businesses will be to focus on the needs of their most passionate customers. Providing the most value through products and services will ensure lasting connections that will lead to long-term satisfaction for the customer and profit for the business.
What has your company been doing to prepare for the new normal hunting economy?
What have you been doing to prepare for 2010?
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Note: State of the Hunting Industry Reports are available to all HBM Members
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Image courtesy of ralphbijker