According to ITR Economics, a global forecasting and consulting firm, the retail industry is currently at the peak of a growth cycle, which means the next step could be a downturn. The national media has been predicting that we are on the brink of a recession for several months, but ITR’s data indicates a much “softer” landing for retail than headlines would indicate. While signs may indicate a slowdown is coming, it won’t necessarily be catastrophic. Retailers that buckle down and ready themselves today will be much better prepared to successfully weather an upcoming shift in the economy.
Slow Growth Is Coming, But One Segment Will Continue To Boom
ITR’s data indicates that economic growth as a whole will stall through the end of 2019. The keyword to keep in mind is “stall.” It’s likely we will not be in a recession of negative growth in the consumer economy, but we can expect to see very low levels of growth with some retail segments expected to top out around 3%. Unsurprisingly, however, one retail segment is still on pace to experience growth despite the approaching downturn. That segment is e-commerce.
Now is the time for retailers to ratchet up their internet game to ensure a piece of the pie. Consumers will continue to spend money online and competition will be fierce, especially as in-store purchases are poised to dwindle. Savvy retailers are digging into their data to develop seamless omnichannel experiences that their customers want, delivering convenience and personalization to their best shoppers.
Get The Most From Your Marketing Dollars
Often times, a knee-jerk reaction to a downturn is to freeze or cut marketing budgets. However, it is companies that focus on marketing in downturns that manage to thrive. It will be imperative for CMOs to protect their budgets as much as possible and maximize their dollars to ensure that spending is optimized to its full potential.
A downturn isn’t always the best time to test out new channels or strategies with reckless abandon, but it is a great time to focus on testing and measuring to make sure that dollars are allocated to the areas that drive the most sales. When money is tight, every penny counts – and must be justified to leadership – so the more testing, measuring and optimizing that is in place, the better.
Lock Down Your Best Customers
Focusing on top customers is key during a downturn. Newer customers can be much more fickle when money is tight, but loyal, established customers can be counted on to continue spending, even if their purse strings do tighten a bit.
Before things start to dry up, retailers should solidify a strategy to keep in contact with their top customers and deliver personalized messaging and compelling offers that keep top shoppers engaged and keep them spending on critical items.
The Sky Isn’t Falling – But Times May Be Tight
Despite the alarms the media sends out about the retail apocalypse, an impending economic slowdown won’t destroy the sector. However, it’s important not to keep your head in the sand. Now is the time to get proactive, maximize spend, boost digital presence and lock down top customers. A little bit of planning and preparation will help stay the course throughout the rest of the year.