It’s Time for Some Good News
I always ask, “Do you want the good news first, or the not-so-good news?”
There is no shortage of not-so-good news about the economy, and between now and election 2012, hold on.
Like many of you, I read the recent Boston Consulting study, conducted this spring and based on 1,500 respondents, on the fact that consumer pessimism continues. Nearly three years into the recovery, more than four in 10 don’t believe the economy will improve over the next few years, and the vast majority plan to rein in spending over the next 12 months. Nearly half said they aren’t financially secure. Consumers also have dramatically shifted their priorities in the past two years, putting less value on luxury and status and more on saving money and staying healthy.
Today, with gasoline prices lower, consumer sentiment has improved slightly. The study also examines the consumer mood on unemployment, falling inflation-adjusted wages and worries about retirement savings.
When the study focused on the future, it showed that 43% don’t think the economy will improve in the next few years; 46% plan to spend less in the next 12 months; one in four worry about their job; and only one in five believes their kids will have a better life than theirs.
And certainly it’s tough to hear what came out of the Congressional Budget Office a few weeks ago: that the U.S. economy likely will fall into recession in the first half of 2013 if the large tax increase and scheduled government spending cuts are allowed to go into effect in January.
By now you may be asking, “What about the good news?”
For our industry, actually, there is much good news. For one, the housing market is showing some positive numbers. The National Association of Home Builders’ measure of foot traffic from people shopping for a new home hit its highest level in more than five years. Sales of previously owned homes rose at a robust clip in April, and prices jumped—the latest indications that the housing market is recovering. Existing-home sales were up 3.4% from March to a seasonally adjusted annual rate of 4.2 million, according to the National Association of Realtors. If this pace holds, 2012 could be the strongest year for home sales since 2007.
And there’s also good news from the auto industry. In the May 23 edition of USA Today: “Auto industry plants roar onto overdrive.” Three key points from the story:
- Plants are adding third shifts and workers are taking on six-day workweeks.
- From a Ford spokesperson: “We are building cars as fast as we can.”
- Sales for 2012 are estimated at 14.3 million, up from 12.8 last year and compared to boom years of 16 million.
When we take an even closer look within our industry, we have reason to be optimistic on many fronts:
- Gas is now selling in the range of $3.50 to $3.70, and the worst of high prices should be over for 2012.
- M&A activity is brisk. Many see a good time to exit, taking advantage of a healthy acquisition environment; others see the c-store industry as a strong channel to invest in.
- Technology, the game changer in providing operational efficiencies, consumer marketing and new analytics to drive our success, has arrived in many forms. Just look at the news from the recent NACStech, and our CSP Daily News story on John Strickland Jr. (www. cspnet.com/BallparkLoyalty).
Convenience as a consumer draw is stronger than ever. Small stores, coupled with excellent customer service, are uniquely positioned to win. (Do not be misled by Tesco’s hiccup here; in that case, it’s not about the size of the store but more about Tesco not understanding U.S. market dynamics.) Walmart Express and the attention supermarkets and others are paying to convenience is still playing out. What’s exciting to me is the debut of new store designs from c-store stars such as QuikTrip, Wawa, Valero and RaceTrac.
So there’s a strong dose of both good news and bad news today. Hold on for the next 180 days—the big political players will spend millions, and none of us will get the full or balanced view of the issues that we need.
But here’s more good news: The election will pass, the negative noise will lessen, and we’ll be able to better tune in to the successes ahead.