Bail yourself out – before it’s too late

It’s almost eerily prophetic that while I was drafting these very words, a huge Noreaster was headed up the Carolina coast causing havoc to travelers and businesses. Eerie because of the foreboding sign of a similar storm brewing in the economy—a storm that is starting to wreak havoc on many industries. And retailing is in its direct path.

Just this past week, a handful of the nation’s economic prognosticators came out with their annual aggregate year-over-year growth predictions for the upcoming holiday season. And as one might expect, the bulls were out to pasture.

The National Retail Federation, normally the alpha male of the retail bulls, was calling, as of Sept. 23, for “a meager [gain] of 2.2%.” Merrill Lynch, citing the unfavorable calendar shift, among other things, predicted a 1% to 2% increase back on Sept. 18. And Fitch Ratings, in its Fall ‘Retail Register,’ said it sees “more downside rating risk than upside rating potential” across its entire U.S. retail coverage. And all of that was before the failed bailout, which, as of press time, had still not been resolved.

Assuming the bailout plan has now been settled, the economic environment going into the critical 4Q period is still wrought with trepidation. And I, for one, doubt that any bailout plan, no matter how carefully crafted, can save consumer confidence this year.

Instead, it’s up to the retail companies to bail themselves out. And while I acknowledge that those words are a lot easier for me to put on paper than for you to bring to fruition, I would suggest at least one immediate pro-active decision that every company can execute: Call in your head of marketing and tattoo the word “save” on the back of his or her hand.

That’s because “save” is going to be the operative word that will resonate most with cost-conscious consumers this holiday season. Along with its close cousins “value,” “discount,” “clearance,” and, yes, even “free,” the concept of saving money will be the trigger point for opening up wallets this December. And if your marketing team hasn’t already filled your weekly circulars and in-store signage with an aggressive value message, stop the presses and redo them.

What’s that? You don’t think consumers are that responsive to the value message? If that’s the case, I’d refer you to Exhibit A: the performance of TJ Maxx, Costco, Wal-Mart and Target, to name a few. Have you noticed how heavily they’re pushing the messages of ‘Save’ ‘Value’ and ‘Less’? Fitch Ratings has, and it spells it out this way in its Fall ‘Register’: “In the face of economic pressure, consumer behavior is changing, with consumers seeking greater value in every purchase…and reducing consumption (of non-discretionary items) or seeking lower-priced options, particularly in light of price increases for food and energy.”

If there’s one message retailers need to get out this holiday season, it’s “save.” And if you get it out early and often, you may just end up saving your business.