Don’t sweat

As the iPad reaches Australian shores and the equities market breathes a sigh of relief that the European contagion has been quarantined, it is again time to recognise that sales are a function of consumer expectations.

In the US retail market sweater sales are down as they head into warmer months, petrol prices are falling and everyone is out getting apps for their new tech toys.

Smart companies will appreciate that exports are the critical key success factor and in the domestic economy opportunities will be expanding for businesses that have linked up, joined or extended their strategic partnerships.

In the short-term business success will come from being closer to customers with good terms of trade and extensive marketing and sales promotions as Lindsay Tanner cuts the budgets of government departments. If you have not updated your customer relationship management system and developed premium prime prospects, don’t wait to be told that your competitor has been out in your marketplace.

The longer term future (ie. next financial year) is likely to be strong for small business interests that have produced innovative, creative and entrepreneurial products and services, after a relatively short market readjustment to the withdrawal of the cash splash and infrastructure investments. The reason for optimism lies in the expectations of the household sector in the US, the fact that the Obama administration will keep pumping out cheques until after the November elections, the mining companies have plenty of profits to protect and the agriculture section is expecting a bumper crop.

The US Conference Board Consumer Confidence Index, based on a representative sample of 5,000 US households increased in May, its third consecutive monthly gain. The Index now stands at 63.3 (1985=100), up from 57.7 in April. The Present Situation Index and The Expectations Index both improved last month.

Lynn Franco, Director of The Conference Board Consumer Research Center says: “Consumer confidence posted its third consecutive monthly gain, and although still weak by historical levels, appears to be gaining some traction. Consumers’ apprehension about current business conditions and the job market continues to slowly dissipate. Consumers’ expectations, on the other hand, have increased sharply over the past three months, propelling the Expectations Index to pre-recession levels (August 2007, 89.2). The improvement has been fuelled primarily by growing optimism about business and labor market conditions. Income expectations, however, remain downbeat.”

Consumers in the survey related lingering concern about the economy, and economists said the impact of Wall Street’s recent tumbles and the debt crisis in Europe was not registered by this most recent confidence study.

Economists still think consumer confidence will remain relatively weak for the next 12 months due to high unemployment and uncertainty surrounding Wall Street and Europe. As for the impacts of those issues, Gallup’s chief economist Dennis Jacobe said: “We were starting to see some good signs that we were building momentum. This has put a wrench into the works. The momentum has come to a halt.”

In Australia the elections will be a six months pressure against major household sales. Other than the techies and the massive expenditures on health and hospitals, there will be a cautious optimism as the electors try to determine who has the longest nose in the game of liar’s poker that will masquerade as market analysis. This is still the best time to plan ahead to get ahead.

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Dr Colin Benjamin is an entrepreneurship and strategic thinking consultant at Marshall Place Associates which offers a range of strategic thinking tools that open up a universe of new possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship.

Email dr.colinbenjamin@marshallplace.com.au
Contact: CEO Dr Jane Shelton, Phone +61 3 9640 0099