A gloomy view of retailing in this week’s Economist. The piece titled ‘From buy, buy to bye-bye‘ (page 66) says companies in the US and Europe have been shocked at the swiftness with which consumers have stopped spending. They are trying frantically to prop up revenues using a variety of promotions, advertising and other marketing ploys – with little success.
Marketers are obviously looking forward to the recession lifting and everything getting back to normal. But they could be in for a disappointment, the magazine thinks. In what promises to be the worst downturn since the Depression, consumer psychology could be undergoing a seismic shift.
When the recession does end, credit will still be hard to get. Many consumers will be focusing on getting their finances back in shape and rebuilding their savings. It’s worrying, from the point of view of retailers, that people seem to have lost the desire to keep buying stuff.
All of this means that companies will have to find new ways to relate to consumers, showing that they empathise with them and their concerns. This has implications for social media, the magazine says, as consumers scour blogs and social networking sites for intelligence on firms and their products.
‘As trust in brands is eroded, people will place more value on recommendations from friends. Social media make it harder for brands to pull the wool over consumers’ eyes, but they also offer canny companies a powerful new channel through which to promote their wares and test new products and pricing strategies.’
Marketers ignore the messages that emanate from these groups at their peril, The Economist says. The winners of this recession will be those that adapt to the new ways, while the losers will be those that just go on pushing stuff at consumers.
Megaphone marketing won’t work in the new world – it’s time to start a conversation.
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