There’s no doubt that the economic downturn has hurt millions of Americans. Unemployment rose sharply, and job creation has a long way to go to make up for the losses. Banks stopped lending money. Foreclosures skyrocketed. The American Dream — until recently a reality for many – of homeownership, stable employment and perpetual lifestyle improvements seemed to slip away.
But the news hasn’t been all bad. Sometimes a crisis can clarify the mind. Innovation is still alive. Businesses are still being created. Success is still an option – but if we thought it was a certainty, now we know better.
There’s something else. Americans have adjusted their spending. That is — they spend a bit less and save a bit more. Now, as the experts argue over whether the recovery is real, whether we’ll suffer a double-dip recession, regular folks are just a little more cautious with their money.
While that pattern spells trouble for the economy, at least in the short term, I’d submit that it’s healthy.
What are the implications for a business leader or investor?
Here’s one: Above all else, today’s consumers are looking for value.
That doesn’t mean, necessarily, that people want the cheapest product available. But they want something that does what it’s supposed to do, and does it well. Witness the explosive interest in Apple’s iPad and the newest iPhone. They’re not the cheapest products in their segments. But most believe they work the best. And people will spend money for something that works.
The same holds true for investments. The trendy, can’t-miss picks trumpeted here and there have lost a lot of luster. But time-tested strategies, including Warren Buffett’s value-based investing, have proven their worth, even in down times.
So make sure that whatever you produce, you build value into the equation. The new consumer hasn’t forgotten how to spend money. But he or she is looking for solid return on investment. Make your product worth their dollars.
