Articles and News
Part 2: Vantage Group Shares Key Strategies to Recession Proof your Business | January 13, 2023 (2 comments)
Encinitas, CA--Welcome 2023!
The jewelry industry has profited from a worldwide pandemic in ways that no one could have expected over the last two years we have all wondered how long it would last. As economic woes began to encroach on the economy, 2021 sales stayed strong, but fourth quarter 2022 showed declining results across the country. While inflation grew, economic factors such as high energy costs, rising food costs, and surging interest rates signal that the road ahead will be tenuous at best. Consumers don’t stop spending in difficult times, they simply spend differently.
There is good news! We are older and wiser now than we were during the 2008 Recession.
It is not necessary to try and predict the future, but simply take a page from history and then work smarter not harder.
Consider how spending changes during a recession.
1. Spending pulls inward.
During an economic downturn, people spend less money outside the home on dinner and entertainment, which often leads to increased spending to enhance in-home experiences.
Products that provide at-home entertainment and home improvement become popular because consumers are spending more time at home.
2. Customers become more price conscious.
As discretionary income shrinks, consumers rightly pause before making a luxury purchase. Self-purchases by women slows as necessities for home expenses grow.
3. Pricing matters
In an effort to save, many consumers develop a sharper eye on and shift shopping habits to focus on more price comparison. Quality becomes key.
4. Store loyalty and reputation matter
In uncertain economic times, consumers look to familiar, trusted retailers as a safe haven. Purposeful advertising that reinforces integrity and an emotional connection always outlasts blanket advertising.
What did jewelers learn in 2008?
- Remember how even those with no financial constraints were at least sensitive to those less fortunate? Women shopping at Neiman’s were bringing their purchase out in less conspicuous shopping bags so as not to draw attention to themselves.
- No matter how much was spent on advertising it didn’t seem to drive business.
- Cash flow management became a new art.
- In-store traffic slowed and keeping staff constructively occupied became a challenge.
- Big ticket items became less and less frequent, yet bridal sales grew.
Here is the formula for 2023:
- Manage cash flow before it becomes a problem.
- Be intentional with your merchandising and inventory management. This is not the time to be over inventoried.
- Focus on turn and price points that work best for you.
- Implement effective pricing strategies.
- Speak to quality and sentiment in messaging.
- Focus on building and maintaining personal relationships with your customer base. Celebrate monumental occasions with them and contact them at poignant times when they have a need to buy.
- Offer customer service that is truly memorable. What can you do exceptionally well to stand out? Develop something.
- Invest in your staff; train and motivate them to be an extension of your message.
- Evaluate staff on sales performance in case cuts become eminent.
- Remember bridal will remain strong, own that segment of your market.
It has been a monumental two years. After experiencing growth in both sales and customers, it is now time to leverage the opportunity to survive the downturn and posture yourself for the future.