1. The effect of recession on most markets is typically fairly short; the short term imperative is survival
2. The longer term imperative is to plan for the “new” (post recession) market. The baseline assumption is for a continuation of pre-recession market development: typically towards increasing premiumisation and segmentation
Questions you should to ask to identify possible deviations from the baseline assumption:
- What is the likely nature of the recovery: vigorous or hesitant, with/without any “hangover” effects?
- How will the recovery be experienced by different groups within society; will there be “winners” and “losers”?
- Will government policy be consistent with pre-recession policy, or will there be a significant shift?
- What will the effects of the above be on public and private spending?
- Will any factors in the broader environment change significantly e.g. price/availability of raw materials; population migration; international trading framework?
- Will the thrust of underlying social attitudes and aspirations remain stable or will they change? Are there any signs of discontinuity in long term social trends?
- What are the most prominent developments in science and technology with potential for application over the next 5 years?
It is also worth analysing the current downturn as we have those previous. This recession also has its roots in problems with property and financial bubbles, and volatility on the oil markets, but was further exacerbated by the near collapse of financial system.
Initial indications of recessionary cycle suggest:
- Deep recession in 2009, with beginning of recovery in 2010
- Slow recovery thereafter as government debt has to be paid off and squeezes public and private spending
- Unemployment to rise towards the 3 million level
It is likely that the nature of recovery will be slow, hesitant, and constrained (closer to 1970’s than 1980’s/1990’s). The shape of post-recession Britain will be determined by responses across society, government and industry:
- Likely to be considerable variation of effects on different social groups, with the under-educated and under-skilled being increasingly disadvantaged
- Government will give greater emphasis on control/regulation; attempt to balance stability with dynamism
- Public and private spending will both be constrained; government policy will determine how the pain is spread across different income levels
- In the broader environment there will be a massive imperative for change, driven by depletion of energy reserves, global population growth and global warming; potential for conflict or co-operation within a shrinking globe
- The long term underlying social trends towards individual freedom and self expression that originated in the 1960’s have proved durable; expect them to continue
- Science and technology will be the most important dynamic force – continuing to evolve at an accelerating pace; the appliance of science to the major issues of resource depletion, population growth and global warming will be the defining feature of the post recession economy
- In terms of social attitudes, we should expect a pragmatic response from the UK public – knuckle down and get on with it – or in the words of a recently revived retro poster…
So with the benefit of hindsight, which businesses and brands are most likely to emerge as winners from any recession?
- Those who learn to work within a more regulated environment
- Those who deliver enhanced value to “cautious consumers” with less spare cash
- Those who operate in science-rich industries
- Those who find new ways to satisfy enduring consumer lifestyle aspirations
And in any recession who will be those who lose out? Those who focus exclusively on survival programs for the duration of the downturn and fail to look to the opportunities beyond…
Proving hopefully that whilst it’s always useful to look backwards, and forwards, we should never dwell too gloomily on the present!