QUICK READ: Consumers will start spending again one they feel that the worst of the pandemic is behind us.
The media is predicting gloom and doom for the economy as the vast majority of consumers are still afraid to go out. They are wrong.
Right now consumers are saving more because of the uncertainty about the future, or more specifically, their jobs. Polls do show that most consumers are still taking steps to avoid crowds because of the pandemic but as the numbers for the virus start to decline quarantine fatigue is going to lead to more people taking to the streets and stores.
It’s important to understand that the economy, in all likelihood, won’t come roaring back immediately but it will come back. Before the pandemic, as consumers were feeling good, levels of personal debt were sky-high. Today you can buy new care with 72 interest-free financing which means the loan will have a higher value than your new car.
What about retailers going out of business? The reality is that there are too many stores and mini-malls. America is over retailed. We don’t need so many stores and restaurants. Too many choices. Weak retailers will be squeezed out but strong ones will adapt to the changes in shopping patterns.
One area of growth for retailers is going to be private label. In recent weeks, U.S. shoppers are buying more of the store’s private labels than usual, spending less across popular convenience store categories and making more trips to dollar stores, according to data from market research firm IRI.
I also believe, as consumers start to go out again, that there is going to be a battle for retail help. We are already seeing price increases in grocery stores and that’s going to spread to other stores as well leading to a small spike in inflation.
Brands that spend money now to refine marketing and distribution plans are going win more market share. Brands that just cut back and and don’t look to revise processes are going to pay a huge price.
The consumer WILL be back.