Simplicity Could Be Best Strategy in ’08
As the New Year dawns, executives and analysts have been developing strategies to deal with what could become a challenging year. There is no unanimous consensus regarding 2008 economic trends, but there are rumblings that a number of economic sectors in the U.S. and E.U. will face some serious difficulties. There are the usual suspects: the housing market, energy prices, the sub-prime fiasco and the credit crunch. Analysts expect our domestic woes to spread to Europe and Asia. Judging the impact, however, will be complicated, given the falling U.S. Dollar and the difficulties some of those regions have reigning in inflation.
There is a mixed bag of reactions as far as what consumers and retailers can expect. High gas prices have impacted spending, as well as the cost of food, travel and healthcare. Despite the clouds, consumers reacted positively on Black Friday and on Cyber Monday. That turnout generated strong retail sales, driven by deep discounts. There is concern, though, that those early holiday numbers were unsustainable.
How consumer spending in the closing days of 2007 translates to the opening months of 2008 is a bit tricky, but we think it’s safe to say that successful business strategies deployed by retailers in November and December of ’07 will help them weather downturns in early ’08. In other words, it pays to watch the winners. While Target and Sears took hits during the holiday season, Wal-Mart (at least by press time) surpassed analysts’ expectations and revised a holiday strategy that worked. We’ll see how much of that strategy becomes a blueprint for retailers throughout 2008.