Consumer Services Will Lead The Recovery
Written by CMG News Contributor, Doug Carleton
The recovery is beginning to show signs of life. As the pace of vaccinations begins to pick up more and more, people will begin to feel comfortable getting out of the house. It is consumer services – everything from restaurants, movies, ballgames, travel, and more that are going to lead the way. During normal recessions, durable goods – things like washing machines, furniture, home improvements – big-ticket items, are the things that lead a recovery. But the pandemic has turned things upside down.
Large numbers of people have been forced to stay home, so we have situations, as a furniture retailer in Richmond told me, like people saying, “I’m really getting tired of looking at that old sofa, so I’m going to buy a new one.” So the money that would have normally spent on various consumer services has gotten spent on various durable goods and big-ticket items. But there are only so many sofas that people need or want to buy, yet the money they spend regularly every month on different things like restaurants, etc. continues to pile up.
Consumer services amount to approximately half of U.S. gross domestic product. In many cases, money that went out in the first stimulus package went to pay down debt or into savings, and another – possibly larger than the first one is coming, and the results are probably going to be much the same as the first time. So there is a lot of money in consumers’ pockets, and they are soon going to start spending it – a lot of it. Looking at your business, and knowing that a burst of spending is getting closer and closer, are you ready? Do you have enough inventory in stock or to meet a sudden surge in demand? If you haven’t yet or already have ordered, are you sure your supplier has it or can get it or make it and get it delivered on time? Many supply chains have been seriously disrupted, and it might've happened to one of your suppliers. You need to know. You don’t want to run out of a product. If customers want to buy it and it's out of stock, you may lose them.
And one more thing. If you have a storefront with a regular stream of customers coming and going, do you have the highest level of safety protocols in place that you can? Covid-19 is not going away any time soon. Fewer and fewer people will get sick as vaccines grow more plentiful; treatments continue to improve as medical science learns more. But, the memory isn’t going to fade away anywhere near as fast. So you want customers always to feel safe so that they can start emptying their pockets in your establishment. Oh, and you'd better make that restaurant reservation early.
This blog entry is a slightly edited excerpt from Doug Carleton's 'The Daily Life Of A Small Business Owner' series. Doug was a mentor with SCORE, Startup Virginia, and Lighthouse Labs, and has 25+ years of experience in small business finance including 12 years in SBA lending. To contact Doug directly, please email him at firstname.lastname@example.org