The announcement that consumer confidence plunged by seven points today is a wakeup call on the psychology of our customers.
If you sell goods or services to American consumers, you need to take a good look at what you may need to do to combat what will probably become a tightening up of their wallets.
At this time it seems to be hitting lower income people, and I say that because of the healthy sales in retail stores catering to the more affluent, while Wal-Mart (WMT) and other retail discounters struggled more last quarter in same-store sales.
Like other slow times, we may have to cut prices if we want to continue with strong sales. That will of course make an impact on our margins, so we have to keep that in mind as we go forward.
While I wouldn't necessarily cut prices or panic in any way at this time, we should keep a close eye on if there are any major shifts in sales across our product lines. It could make a difference on some rather than others, and so certain products may not need much tweaking, while others may need some major overhauls.
What we need to do is have some backup plans in place if this becomes a long stretch of decreased sales, and be ready with what we'll do if it happens. For those of you in contact with your customers, it could be a good idea to send out some surveys and questions simply asking where they're at and how they feel about the American economy.
It could give us some answers that could help us set up some fast responses if things begin to go bad.
I'm not being alarmist here, but we definitely need to be aware that this is a distinct possibility. Those best prepared should be ready to respond to any change in the psychology of our customers. Getting their responses and reactions is a good first step in getting the feel for where they're at. It may be something we start to do on a monthly basis to keep adrift of their current way of looking at things.
Just be aware of who your core customer is when they respond. It's them that we need to be primarily concerned with, as they're our key to success.
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