The Guru speaks: Growth is coming

So now it seems the positive feelings that started growing in the dead of winter are finding a voice in the new McKinsey Global Survey (thanks Ryan!). Albeit the signs are very feint and couched in non-negative terms. (Most companies are not actively seeking new cash).

It seems that most people are over the media shock and awe of late last year and buttoning down to make their companies more efficient,,, and effective! The growth agenda is back on, will you get there first?

Gaming like movies?

Earlier I wrote about how cinema was experiencing a boom. It seems that at least one gaming company is also doing well. Take Two Interactive software has revised their forecasts for 2009 to go from a projected loss, to a projected profit. Their profits for 2010 are expected to grow by 140%. Beyond that they are also actively hiring. It seems like a combination of good content (for instance Grand Theft Auto) and smart leveraging of existing products (download versions of games) has lead to sales boosts. Seems the need for distraction is still strong!

Spring Blossoms

The German word for "blossom" is also the word for counterfeit money. This kind of made me wonder about the US bailout good news stories. It seems that quietly about $350Mill of TARP money has started flowing back. Similar to Germany, the tight restrictions were seen as a competitive hurdle. More interestingly though one executive was quoted as saying: "We really didn't need the money"


So if banks start seeing that they don't need the cash, the stock market has been climbing non-stop for 4 weeks and the Californian real estate market is showing signs of recovery, I can only say: Spring has sprung! But don't go picking any blossoms.

Hedgehogs and foxes

Famously thinkers can be divided into two groups, the hedgehogs and the foxes. Hedgehogs stick to what they know an build a prickly barrier to protect that view. It seems that the hedgehog strategy has also worked for Gerresheimer, an industrial company specialized in developing packaging and delivery systems for pharma companies. By focusing on highly technical products and a growth industry as a client base they have been able to deliver solid returns with a projected growth of 7% for 2009.
Next week we look for the succesful foxes, if they haven't been hunted by the leverage monster.

Creativity: a contradiction in times?

In a week where the advertising industry have been singing the praises of "ideas" and warning against an over reliance on metrics to get out of troubled waters, online publishing has announced a growth rate of 16% for 2009.

Is this just a continuation of the advertising industry in general's decendancy or something more remarkable. Media agencies have been chipping away at traditional advertising's throne ever since the conjoined twins were split in the early 80's.
The fact is that business attention is gained and secured by numbers and they should be a part of creative ideas. Together Everyone Achieves More! It seems the time is right for accountability and creativity to become business tools once again. As a single concept.

Taking the snip

Another unexpected growth industry in these pressing financial times. As the cheapest form of permanent birth control, more and more couples are resorting to vasectomies.
On a sociological level though we have to think seriously about the consequences of this though. Is this a form of economic castration?
Interestingly though, the trend is also linked to individual's expectations about long term economic prospects. If you don't feel secure in your job chances are you will be careful about expanding the family. This has been seen in the rise of economically motivated abortions. Will this become a new leading indicator for real economic confidence?

The sweet taste of comfort food.

Thanks Maria for this note. Along with cupcakes, it appears that sweets (or candy as the trans-atlantians call them) are doing really well. With some stores reporting an increase of 10% in January and February sales, others are looking to expand.
There are lots of theories as to why sweet things are being lapped up, and they all seem to hinge on the low cost of the sugar rush being an easily accessible soul soother when richer luxuries are out of reach.

Fresh breezes

Lovely snippet on CNN today! It seems nudist camps are experiencing a little boom. In these stressed out times it appears taking your clothes off makes you feel better. (I would go in to all the other puns used by CNN).
A bit concerning though is the link between socialism and nudism in other forums. It seems the rise in skin exposure signals alignment with other anti-capitalist values.

Setting sail on a rising tide!

More and more voices are pointing to the shift in the Baltic Dry Index. A great leading indicator of economic activity. Having bottomed out in December it started climbing again in the last two months.
This could mean that companies have flushed some excess capacity from the supply chain and are now again shifting goods. Whatever the reasons the fact is economic activity is on the rise. All in all, a great reason to feel the tide has turned!

Franchises doing well

It would appear that one form of business is doing well across the board: Franchises. From Dunkin Donuts to Brake King (the latter part of the overall auto repair boom), it seems that franchises are weathering the downturn better than other forms of business.

This is good news for both franchisors and franchisees. As more talent is released to the job market, people are looking for a quick way to get back into cash flow. A good franchise idea, addressing a basic need will be safer and easier to launch than an own business.
With the financial and marketing backing of a known business, the franchisee will also be able to get up to speed more effectively. It may be the best way to spread risk in these risky times!

Gone fishing!

Apologies for missing posts this week. You might think I had gone fishing. This wouldn't be odd in a recession. It seems along with the outdoor boom mentioned before, fishing is receiving a healthy boost as pastime.
Although the activity itself is cheep, the market for tackle is booming. This happened in 2001/2002 as well when it grew by 12%.

Amazing if you consider that sales for the category actually declined by 4.8% in the period 1996 to 2001. Once again it seems everything that expresses tried and true frugality is receiving a boost. I just wonder when the increase in fishing will bite into MacDonalds dizzying success! Same store sales increased 1.4% in a period where eating out is deemed a luxury. Seems the killer app for recession would be to combine fishing with MacDonalds.

The spirit of creation

Today I can whole heartedly recommend The Economist's report on Entrepreneurship. Amongst the basic points about how entrepreneurs like Gates and Jobs drove their companies out of the ashes of recession to dominate the world. The good news is that although the image of business has been tainted, the image of the entrepreneur shines brighter than ever. They are truely the global heroes enjoying a renaissance.

Burning the books!

I am sorry but I simply can't say it any better than The Hollywood Reporter: " Recession? What recession? There was no sign of a downturn at German media group Axel Springer, which reported its fifth consecutive year of record profit Wednesday, earning 571.1 million euros ($729 million) in 2008."

A strong portfolio including digital media lead to growth, compensating for a drop in newspapers and magazines.

Other reports also indicate that the German book market is showing signs of growth. Roughly translated Mr. Honnenfelder (ex head of DuMont publishing) said at the opening of the international book fair: "The international recession is not evident in the book market".
The rise in book sales is an interesting one though. Has the recession lead to more people buying books? Looking for something solid and firm to hold onto? That DIY CV builder feels so much better with a hard cover!

Dubai 2.0?

After all the doom and gloom about ex-pats leaving cars at the airport, it seems that there is still structural growth in Dubai! The engineering firm Drake & Scull have announced a growth in profits and an active desire for acquisitions.

They still see growth in Dubai of up to 25% above last year. Drake & Scull focus on plumbing and mechanical engineering, positioning them as a leading indicator to the construction industry.

Retail in rude health

After praising the health of Walmart yesterday, it appears that Kroger has also shown a strong recovery. Beating Wallstreet expectations lead to a good jump in their share price.

People are still shopping for groceries and the stores with the right mix for these times are benefiting. The interesting thing though is that Walmart was able to grow in both food and discretionary items!

Disruptive technology

OK, so today's good news is more of an emotional story. The US chocolate company Frutels have launched a great new product to help fight Acne, from the inside. The good news is: It is chocolate!!!

A good reminder that another disruptive technology that was launched during the last recession: Google.
These dark times offer a great opportunity to launch new products: lower costs, less noise and distracted competition. A good story will grow!

The sun is rising!

Now you have it, it is official, even Time magazine says recession is on its way OUT!
Helpfully they are pointing to the signs we should all have on our active desktops to confirm the sun is definately rising for the world economy. These include car sales rising, the discount rate developing market bonds and a few other things.

Personally I'll keep an eye on how long the queues at Starbucks are!

Consumer confidence?

Over the last week I have heard from various people about companies that advertise job vacancies very vigorously. Here is a story from Esther:

"Shopping for staff....
Last Saturday, at the Kaufland Shopping Centre Markt Schwaben, there was a loudspeaker announcement, announcing that they are looking for staff - if someone is interested, just go to the cashier and apply..."

MediaMarkt, Sparkasse and other retail outlets in Munich are also doing similar activities which seem far more pronounced than they would have been before the crisis (massive job posters on the subway walls?). Are companies cutting down on their advertising budgets and using personnel ads to drive awareness and consumer confidence? Is this a new wave of relationship marketing?

On a different note, those of you interested in how buying Tiramisu can help us out of the financial crises, you may want to pick up this month's edition of brand eins! Title story: "Good News"

Bra's get lift in downturn

Another great story of a inspirational company in the UK bucking the downturn trend. Michelle Mone built up her company after having left school aged 15, due to ill health. She came close to doubling profits last year year and looks set to grow again in 2009.

Innovating at the value end of the market has lead to lucrative contracts with major retailer Tesco.
By providing a "comfortable cleavage enhancing bra" she certainly capitalizes on a low cost way of looking good and feeling good in the downturn! Expanding through strategic allegiances in the route to market has solidified that success.

Growing margin in declining markets

Once again, thanks Jacques for this amazing story. The Financial Times Group reported a 13% rise in profits for the year 2008. The key driver of profits was an increase in subscription revenue. This was more than able to compensate for the decline in ad revenues.

You can argue that FT's content is particularly relevant in these times and that a subscription is worth more now that financial news becomes a lifeline rather than a nice to have. Fact is they achieved an increase in OP of 11% on an 8% increase on sales proving you don't have to burn the farm to save it. There is value in farming loyalty.

The new lipstick index?

Much has been made of the folklore that during the depression women bought lipstick to make them feel better. Marketers have looked at the sales of lipsticks and micro-luxuries ever since as an indicator of the general mood. The less lipstick sold, the better people must be feeling about themselves, and their prospects.

It seems that movies, at least in America have experienced a similar boon over the last six months.
As the International Herald Tribune reported, receipts are up nearly 18% this year (even as ticket prices have increased)! This was not true during the last downturns, where people economized on supposed discretionary expenses. It seems that Hollywood has smartened up to improve the offering to fall in line with the need for hope and a feel good factor. Escape is still good value!

Doing better by helping customers deal with bad times

Here is an interesting ray of light from a small firm in the USA. SCM is a small real estate company who posted a 40% growth in 2008. Keep in mind that troubled real estate assets are what started the black hole of the current financial crisis.

By providing better lender services they are able to help consumers navigate the tough market for finding loans and restructuring current commitments.


They have also used the current weakness of competitors to expand geographically

A great case of customer intimacy leading to differentiated services in a very, very, tough market!

Cashing in on Good Feelings

I had to laugh this morning when I saw a massive poster for the German musician Sasha's new album:
"Good News on a Bad Day"

Is this a case of misery loves company, or simply a commercial exploitation of the current mood? Oh Sasha, please please please!

Jack Wolfskin rocks ahead

In December Jack Wolfskin announced that they were expanding their retail operations in the UK.
Yesterday there was a full page article about their growth expectations for this year. Manfred Hell stated quit confidently that they expect 15% growth in 2009! Without the crisis it would have been 32%. FT Germany puts it down to a trend towards wearing functional outdoor clothing, making it an exception in leisure and discretionary spending.

As all their friends in the industry are not telling the same story, and traditional sports brands are increasingly competing in the outdoor market, I thought there may be more to it. In 2005 they invested quite vigorously to improve the efficiency of their IT backbone, giving them more control of their operations and data. With 15% of turnover invested in marketing this year (when others are cutting back) you can expect Jack Wolfskin to do really well. With both operations and marketing set up perfectly to take advantage of weakened competition, the iconic Wolf will show teeth as well as claws.

Lessons from Netslé's growth

Amazing news in these times, not only did Nestlé beat expectations for 2008, they announced an expected growth rate of 5% for 2009.

This ads another layer of competitive advantage derived from having a diversified portfolio. Diversification in geography, category and price strategy. ( "Paul Bulke argued the company's major strength was that it offered a range of expensive and value brands, meaning consumers could “trade up and trade down” while still buying products from Nestlé's stable.")

Working on a product launch for P&G 5 years ago I experienced an interesting twist to the power of trading at the top and bottom of the market. After spending three years to develop a product for the so called "bottom of the pyramid" the engineers came up with a solution that was cheaper, more sustainable and delivered a better customer experience than the top of the line. By using "being frugal" as a design constraint they came up with a solution that could make them more competitive in the top end.

Innovation at the edges, strengthened the core.

In these times it is a humbling thought to remember that 4 Billion people are not experiencing a financial crisis. Because the live below the poverty line a financial crash in New York does not affect them. Perhaps this may spark a renewed interest by companies in learning the true meaning of being frugal, and turning that into better solutions.

Fanfare and silver bullets

Thanks Jacques for bringing this article to my attention:
ComScore: Online Sales Up In January, Concerns Linger
"E-commerce sales grew 2% in January compared to a year ago, offering online retailers a glimmer of hope after the unprecedented 3.5% fall-off in business during the holiday season, according to a new comScore survey. "

Two things are interesting for me here:
1. Amazon grew in a industry where others declined over Christmas.
2. There is still a lot of slack to be taken out of traditional retail. ("Fulgoni pointed out that while e-commerce went up 2% in January, offline retail sales declined 6% to 14%...")

It really got me wondering about how to out-compete your rivals in these economic times. All good and well that online is growing, but is it simply "price" driven by "operating efficiencies"?
Being the optimist that I am, I have to believe that customer intimacy has something to do with it. By offering direct incentives (coupons online) to consumers via websites as apposed to traditional media, brands are growing even closer to understanding what their customers view as value in tough times (A/B testing and offer generation in real time). Dynamically shaping the offer to fit a customer's idea of value is my definition of customer intimacy.

The next step has to be a more networked approach between brands to share this knowledge and find portfolio solutions. As someone one said, in tough times the enemy of my enemy is my friend.

Creating capacity for growth

So no surprises that the Chinese search engine baidu.com grew last year amidst the crisis. No surprises even that their revenue grew by nearly 85%, or even that their stock price jumped nearly 5% on the news of their results (as it should with a doubling of profits :-)).

The size of the untapped media market in China means that even slowed growth is immense growth by other standards. The question really is, how can we find latent/untapped demand in markets where it is not so obvious.

We have often spoken about third world markets leapfrogging waves of technology to show growth and demonstrate value by adapting new solutions with no legacy costs. Isn't recession a great opportunity to write off legacy costs and kick-start accelerated growth.

Shark attacks a cyclical indicator

It appears that shark attacks have declined in line with the economy. The theory is that fewer people go on coastal holidays. putting less people in the water with sharks. This got me thinking about how many other things we aren't doing and how that should be improving the outlook for insurers. Fewer car trips, fewer plain flights. As a whole the risk profile of the population should be looking better. I wonder if home cooked meals will take on!

From CNN:

Economy puts bite on shark attacks, researcher says

Shark attacks on humans were at the lowest levels in half a decade last year, and a Florida researcher says hard economic times may be to blame.
... When the economy improves, shark attack numbers are likely to go up again, according to Burgess, predicting the number of attacks in the next decade will surpass those of the past 10 years.

ONLINE TO BENEFIT FROM US SLUMP

LONDON: Online is likely to be the major "winner" of the US recession, as marketers shift funds into more accountable media. Television should also perform comparatively well, but newspapers look likely to face a highly challenging climate.

These are among the main findings of WARC Online's study US media winners and losers in the downturn, which forecasts that US adspend will fall at constant prices by 2.5% in 2009, following a decline of 5% last year.

An assessment of previous US downturns suggests the current advertising slowdown may be more severe than that of the early 1990s or at the start of the new millennium, and could resemble the "bath shape" with which Sir Martin Sorrell defined the latter slump.

Online, however, is expected to enjoy the best rate of US growth this year, with search being the main driver of expansion, as marketers endeavour to maximise the value of their depleted budgets.

While TV is set to see a 4% decline in adspend in the US for 2009 as a whole, the medium is also forecast to retain its overall share of the market at the cost of other media, particularly newspapers.

Overall, press advertising's share of American adspend has fallen from 36% to 24% in the last decade, and ad revenues are predicted to fall by 9% this year after posting a 14% decrease in 2008.

Data sourced from WARC Online, 19 February 2009

For me the key words here are "accountability". I think it builds nicely on the post I did this morning. The ability to make outcomes more accountable give the illusion of certainty in uncertain times!

The truth about the german economy

I love Bild am Sonntag. This week they got into the spirit of spreading positive news by pointing out that quite a few of the top 50 companies in germany are hiring:

Die Job-Wahrheit

Dreiundfünfzig von siebzig grossen deutschen Unternehmen wollen keine Mitarbeiter entlassen und (fast) alle zahlen auch in diesem Jahr Urlaubs- und Weihnachtsgeld

A closer look at the list of people hiting is also interesting. The top companies in terms of their plans are retail. Aldi, REWE, Kaufland, the big discounters in other words. Yes I realise these are most probably short term contracts but, if consumer confidence was really low, retail would be laying off.
The other sectors hiring include healthcare and some banks. Now that is interesting!

Sex against the recession!

It appears that dating websites are having a boom in the recession. Old scientific studies showed the link between stress and dopamine. It seems people are looking for romantic love in these troubled times!

From the BBC:

Dating websites eHarmony and Match.com both report major boosts in traffic of up to 20% over the past few months.

Surely when people need relief from their financial worries they reach for the natural medication created by body contact?

A YouGov survey of 20,144 British adults in November 2008 found sex was the most popular low-cost activity.

Sex toy shops as far apart as Amsterdam, New York and China are anecdotally reporting a boom in sales.

Beating the downturn with innovation

Intel plans to beat the downturn

This is a great article that Sabine M forwarded. It tells a great story about innovation is the motor of growth. A $7bill investment in the USA seems like a headline from 2007, yet this is exactly what they plan to do now.

More inspiring for me though is that they are using the downturn to skip incremental change and focus purely on bigger steps. Clearly small steps in innovation won't be noticed or rewarded by consumers who need much bigger incentives to part with cash.

The upside of the downturn

I came across a group of women who have turned recession into a paying business. They have turned their own experiences of being made redundant and fired into a media opportunity. By creating content that is highly relevant in these economic times they have an audience that brings them income:

http://www.recessionwire.com

Their blog basically "opts out of the downturn" by providing inspirational stories and good news in tough times! Relevance still drives attention.

Who is growing?

Newsweek is running an article this week about industries that are beating the unemployment line. These industries are hiring:
1. security
2. education
3. solar energy
4. green business
5. wind energy
6. energy efficiency
7. health care
8. nursing

There are basically two themes here: getting more done with less (sustainability) and markets where the need/volume is not driven by cyclical markets (education/nursing). We should be well positioned to design for both of these.

http://www.newsweek.com/id/181875

Finding comfort with family

Board Games are having a revival as families bond over traditional favorites:

From INTELLIGENT LIFE magazine, Winter 2008
In hard times, board games flourish. Lucy Farmer finds out which ones sell best, where they came from and why we love them ...
read more on the economist page:::



http://moreintelligentlife.com/story/family-fun-your-stay-cation

AMAZON'S 'BEST EVER' HOLIDAY SALES TRIUMPH OVER SLOWDOWN

SAN FRANCISCO: During the run-up to Christmas online retail giant Amazon boasted it was enjoying its "best ever" holiday season – a claim dismissed by some folk as "just whistling in the dark".

They were wrong. For the quarter ended December 31, Amazon's net profit rose 9% year-on-year to $225 million (€171.61m; £157.41m), up from $207m in the same quarter last year.

Commented Amazon founder/ceo Jeff Bezos, as most other retailers (both on- and off-line) beat their breasts and rent the heavens with cries of woe: "We remain relentlessly focused on serving customers with low prices, great selection and free shipping offers, including Amazon Prime."

"We're particularly grateful for the unusually strong demand for Kindle in the fourth quarter," huzzahed Bezos, referring to Amazon's electronic book reader, which was out of stock for most of the holiday season.

Data sourced from International Herald-Tribune; additional content by WARC staff, 02 February 2009