It Might Be Time to Circle the Wagons
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If you have a small to medium-size e-commerce business, maybe it's time to think about circling the wagons.
At least one could reasonably draw that conclusion after taking a gander at the latest executive briefing on "Economic & Consumer Insights for Marketing Executives" from BIGresearch.
The findings from a survey of about 7,600 consumers polled from Oct. 3 through Oct. 10 show we're all in for a bit of a rough go before things get better. All this war talk appears to have knocked the dollar signs out of a lot of consumer spending plans.
Add that to what seems like a permanently tanked stock market and you have 72.3 percent of those polled (versus 70.9 percent in September) predicting it will take more than six months for the economy to begin to recover.
The survey found, for instance, that the pending war with Iraq continues to wreak havoc with consumers, as confidence among those surveyed hit a low of 26 percent in October (versus 29.9 percent in September). The optimists stated they were "very confident/confident" about the chances for a strong economy. Meanwhile, 74 percent said they had "little/no confidence."
In stark contrast, 75.4 percent were very confident/confident and 24.6 percent had little/no confidence back in October 2001 - and that was after the terrorist attacks of Sept. 11, 2001.
Is there a bright side?
Perhaps. A new National Retail Federation (NRF) survey, "The NRF 2002 Holiday Consumer Intentions and Actions Survey," which was conducted by BIGresearch for NRF but is somewhat separate from the BIGresearch monthly reports, indicated consumers plan to spend an average of $649, an increase of 2.6 percent from 2001 projected spending.
And other surveys indicate that online merchants may get a larger share of the pie again this year as more and more folks get comfortable with the e-commerce concept.
However, according to the holiday spending survey, a full one third of respondents plan to spend less than last year. The majority of consumers (56 percent) plan to spend about the same as they did in 2001.
"We will be seeing a very cautious consumer this holiday season," said Phil Rist, vice president, strategy for BIGresearch, a Prosper International company, based in Worthington, Ohio. "It is clear that consumers are willing to spend money, but it will ultimately be up to the retailer to give them a good reason to come out and shop."
"We will be seeing a very promotional retail environment for the holiday season," said NRF President and CEO Tracy Mullin. "In essence, all retailers will be discounters..."
The problem is, if you're a smaller online merchant or a Mom-and-Pop business, you just can't play that discount game with the big boys of online retailing.
The survey for the NRF found that most consumers (77 percent) will shop at discount department stores followed by traditional department stores (53 percent), the Internet (46 percent), specialty retailers (45 percent) and catalogs (37 percent).
One reason to shop is to reward yourself. The executive briefing survey found that a majority (55 percent) plan to take advantage of sales/discounts to buy for themselves or their households.
Hence it's likely consumers will be hunting for bargains across all product categories this season. Top gifts consumers would like to receive this year, according to the survey: 1. Books, CDs, DVDs, videos, video games; 2. Clothing/accessories; 3. Gift cards/certificates; 4. Consumer electronics/computer-related accessories, 5. Home decor/furnishings.
Paying down debt remains the No. 1 consumer priority, the survey found, with 43.8 percent making this a priority over the next three months. Rounding out the top four consumer financial priorities were 2) Decrease overall spending; 3) Pay with cash more often; 4) Increase savings.
My conclusion is that we all WANT to spend more (gee, I certainly do) but prudence may dictate cutting back a bit, or even more than a bit.
According to the executive briefing, plans for buying big-ticket items in all categories (car/truck, computer, furniture, home appliances, housing, jewelry/watch, RV/boat, stereo equipment, TV/DVD/VCR, vacation travel) have reached new lows for the year.
About 41 percent of those surveyed say they have become more practical in their purchasing habits, up from 37.1 percent in September
My take: Caution rules.