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