Essentially, hopes for a continuing pre-Christmas sales revival dashed amid signs that consumers are still limiting spending to essential items, it is perhaps useful to consider the impact of shell-shocked people ‘making do’ with existing products and postponing purchases of replacements in these uncertain times.
In other words, the compulsive need to acquire the latest model, and upgrade in line with manufactured aspiration has been the unintended casualty of the five-year-old global financial crisis, a fundamental change that will impact consumer-purchasing and resulting sales for at least the next five years, if not for a generation…
Moreover, as consumers learn to ‘kick-the-habit’ of constant renewal, no amount of political enthusiasm and signposting of false economic dawns, coupled with frantic above-the-line exhortations to buy, can hope to compete with the power of street-level social networking as savvy consumers realise, and share their discovery that ‘making do’ works, and can even be a noble pursuit, certainly worth boasting about, at all levels…
Housing demand
Essentially, taking big purchases first, it is worth considering how many householders are trading refurbishment and ‘extending’ for the purchase of a ‘new house’ that is a better match for growing family needs. Think of even a third of homeowners, with unprecedented access to price-comparison facilities on sales costs, legal fees, removal charges and especially property values, deciding to postpone a house purchase for even a year, taking 33% out of the market.
Cars & home entertainment
Similarly making do with the family car for a third year may add a little to upkeep costs, but takes another slice from new car demand. And what if large companies decide to apply the same logic to fleet replacement…? The same with (age permitting), mobile phones, laptops, home entertainment, despite the increasing convenience, compulsion and focus of Amazon, etc., etc., etc.
Austere eating…
When it comes to food, the impact of ‘making do’ on out-of-home eating is already obvious as people increasingly retire indoors, hopefully via a ready-meal+wine upgrade… Meanwhile, if consumers are stretching sell-by limits and not binning meal left-overs but are in fact re-heating for even one meal in three, we again have at least a third of demand removed from our sales forecasts…
Personal grooming
Moreover, on a micro-level, even those who still resort to an escapist pint on-premise, are finding that the smoking ban in public places means less detergent is being consumed in washing clothes and hair… If in any doubt, check out your acquaintances in detergent and toiletries categories…
These developments are having a fundamental and unprecedented impact on ‘demand for new’, in ways that are becoming socially acceptable… In other words, shops are closing, not simply because of the increasing power of the big guys, but because real demand is down, in ways that will not reverse, anytime soon.
The way forward…
Realistically, in an environment where only politicians and vested interests are optimistic, we need to factor these ‘making do’ drivers into our business budgeting, accepting the ‘good times’ are gone, that our business models are based on ever increasing demand, and realise that in a zero-sum game, any growth has to come at the expense of the other guy.
In other words, assume that a third is knocked off your next year’s sales, and seek ways of replacing those sales at the competition’s expense, via a better match with consumer need, fast… This can only come via a realistic evaluation of what makes your brand special, rather than unique, compared with alternatives available to consumer and retailer. It means stripping the offering and the company down to basics, eliminating all attributes that do not earn their keep, and finding ways of making what remains yield a return on capital employed of at least 15%, in a flatline market…
Accordingly we need to find a way of identifying what a ‘making do’ consumer thinks is important in our category, and communicating (and delivering) the real demonstrable difference our brand represents, better than, and at the expense of, our competitor, in a way that makes a savvy consumer come back for more…
If we can then find a way of going a step farther in identifying and meeting new consumer needs to such an extent that the satisfied user will ‘tell a friend’ we may hopefully bring incremental custom into the category… But in the process, we will have learned how to ‘make do’ with zero-sum demand, and will be ready for, but not dependent upon ‘new’ purchasing in the market…
After that, everything is incremental…
