What Creates Value For Americans Now?

By Eric Britten

So, how are your company’s sales doing? Still waiting for things to pick up? Well, if you have traditionally dealt in relatively inexpensive lower quality products that can be thrown away and easily replaced, your wait may be a bit longer – like forever. Similarly, if you needed to be able to offer 100% financing, or anything close to it, to move your inventory, that inventory could become a lead weight around your neck.

The economy’s changing a lot more that some folks realize. Many consumers suddenly found themselves upside down in the debt – value equation. That is, they found they owed more than the things they owned were worth. This clearly was the case with many homeowners, even if they thought they had a reasonable amount of equity in their home. It just plain evaporated. The same was the case with other items, like cars, boats, investment property, high end electronics – anything that people could get nearly 100% financing for or just put on a credit card. At the same time, people’s security was threatened. Companies’ sales were dropping, layoffs were rampant, hours were being cut, and jobs became extremely hard to find.

While it sometimes may be difficult to get the public’s attention, the sudden change in people’s financial situations woke them up like a fire bell. Saddled with substantial debt and an unsure future, consumers just plain stopped buying. Credit dried up, so even if people wanted to borrow, they couldn’t. Now Americans are hunkering down for the long haul. They know they have to pay down their debt. So, that’s one place dollars are being directed.

On top of that, people are now focusing on how they spend the disposable dollars they do have. Indications are that consumers are redefining value. They are focusing on how well a product is made; how long it will last. This not only is true for high end items such as cars, appliances, and electronics. It carries through to clothing, household goods and how many loads a box of laundry detergent will wash.

Companies may well follow consumers’ new buying habits as they look for increased longevity, higher quality, and upgradability in the assets they procure.

Companies that sell products and services will need to take note of these new spending habits. Their strategies will need to focus on meeting the demands of the customer, not convincing the customer that they need something they don’t nor convincing them that a cheaper alternative is just as good as a higher priced one. Consumers are going to become more savvy buyers. Retailers and service providers who understand the new definition of value will find life a lot easier than those who do not.