By Joe Froelich
Recession. The "R" word. Given the housing doldrums and challenging cost escalation of late, the recession buzzword can be seen or heard seemingly once a minute on TV, radio
newspapers and around company watercoolers. For many, the word triggers conservative spending and stashing away a few dollars for a rainy day.
But, as Charles Dickens wrote: "It was the best of times, it was the worst of times." To some companies, the "R" word is music to their ears. In fact, there are many counter-
cyclical industries that are not only recession-proof, but actually thrive during an economic slowdown.
Examples of sectors that historically enjoy success during an economic downturn include operational consulting companies, discount clothiers and electronic refurbishing
companies. While not every communications professional works in these industries, all can learn valuable lessons that will help their companies exploit the weak economy and profit
accordingly.
Time To Right-Size The Businesses
As manufacturers, service providers and retailers feel the pinch of an economic downturn, many must adjust or streamline their operations in order maintain their profitability.
During this difficult process, third-party experts are often brought in to help analyze, identify and address issues within a company's organizational and process flow.
For some companies, the process changes and new initiatives could prove the difference between survival and bankruptcy. Consider these strategies for executing process
changes:
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Hire a consultant. Many CEOs turn to consultants to aggressively reduce company cost structure. Consultants can remove 20-30% of total operating costs while increasing
efficiency. They accomplish this feat in myriad ways, including: decreasing labor costs, improving employee productivity, reducing outside contractor costs and reducing waste.
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Modify. Enterprise-wide cost reduction requires both process and behavior modifications on the part of management and workers. Consulting firms have the expertise to
install these modifications, as well as the expertise to ensure the sustainability of these changes.
Like many companies in this industry who have seen success in 2008, Management Consulting Group Plc., Parson Consulting and Kurt Salmon Associates are among the firms that have
seen their stock jump 25% between Feb. 1 and May 15, 2008. Many other well- known consulting firms are experiencing healthy growth trends as well. The industry overall is
expecting double-digit growth over the next 12 months.
Shopping For Cheap Chic
Discount apparel companies such as Marshall's, T.J. Maxx and Ross tend to enjoy an expected rise in sales at the mere mention of an economic slowdown. Rising gas, food and
energy prices are affecting current economic conditions and directly squeezing the average consumer's disposable income. Many are purchasing at these discount clothing stores as a
means of stretching their hard-earned dollars.
Investors are already responding to this sales trend. Since early January, the stock price of The TJX Companies Inc., parent company of Marshall's and T.J. Maxx, has risen from
$26.59 per share to $32.04 per share, an 18% increase. Net sales for the first quarter of fiscal 2008 increased 6%. TJX Management anticipates aggressive growth over the next two
years.
These examples indicate an opportunity for public relations and communications professionals to capitalize on consumers' increasing need for cost-effective alternatives.
Initiatives should home in on this trend to attract audiences that, in the past, may have been less inclined to seek out cheaper alternatives.
Reduce, Reuse, Recycle
With both business and private consumers paying attention to every dollar they spend, many turn to pre-owned or refurbished hardware during an economic slowdown.
Slimmer budgets and reduced operating income make the procurement of refurbished equipment an attractive alternative to buying new, especially since very few actually need
state-of-the-art equipment for the performance of everyday functions.
Refurbished laptop and desktop computers, monitors, copiers and phone systems are the perfect remedy to fill a need on a tight budget. These goods are reliable because the
manufacturer has already corrected any quality issues the products may have had. Also, many are still protected under manufacturer warranties and are sold at significantly lower
prices than new equipment.
Adding to economic conditions, the growing emphasis on going green has given this industry an additional boost. Less natural resources are used in the refurbishing of
electronics than in the manufacturing of new ones. Refurbishers are capitalizing on this trend by promoting the environmental angle in their collateral materials.
Acer Inc., the parent company of Gateway and E-machines, has seen its stock rise from 50.1 TWD from Feb. 1 to 68.9 TWD on May 15. For the first four months of 2008, Acer
reported sales of 115.2 billion TWD against sales of 80.6 billion TWD over the same period of 2007, an increase of 42.9%.
Clearly, economic downturns for some are opportunities for others. There are dozens of other industries that welcome slower economic conditions. Wholesale clubs (Sam's, Costco
and BJ's), fast-food restaurants and other sectors historically flourish during recessions.
So, the next time a talking head on television, radio host or office know-it-all tells you how bad things are, remember, there are firms thriving amid the gloom. PRN
CONTACT:
Joe Froelich is a marketing researcher with Proudfoot Consulting. He can be reached at [email protected].