I do not understand economics. Or, I do understand, it’s just that economics stopped making sense.
Did you know that demand for housing was down 18% in April; yet prices remain 7.4% higher compared to last April? How does anyone explain such figures that are clearly at odds? When you dig in and work hard to understand, the answer that is offered up is housing inventory remains low. So, demand is low, but the supply is even lower. I don’t know if I agree with this analysis, but it’s the one that’s being offered up.
Necessities Only, Please
Whatever forces are at work in the economy, everyone needs shelter. Plus food, and clothing. This list of necessities is shrinking. Transportation would be on the shortlist, but how much driving have you done since March? How much gasoline have you purchased?
Anne Helen Petersen is a senior culture writer for BuzzFeed News. Her latest piece is about the lack of desire to buy things, and I want to share it with you because when people have little or no need to buy, the engines of commerce grind to a crashing halt. As people who work in marketing, media, and advertising, all of our livelihoods are in jeopardy. Some of us know it already, and some of us are about to learn how real this hard reset is going to be long-term.
Not wanting to buy things feels as bizarre as not wanting to sleep or not wanting to eat. It’s been ingrained in us, as Americans, as an unspoken component of residency.
Petersen reminds that in April, retail sales fell an astonishing 16.4%, far more than the 12.3% economists had predicted. Clothing store purchases went down by 78.8%; furniture and home furnishings plummeted 58.7%. If you feel like you’re buying far less than at any point in recent history, you’re very much not alone.
The old way wasn’t just unsustainable for millions of Americans. It was also deeply unsatisfying. Consumer sentiment — and behavior — suggests we’re hungry, even desperate, for something different.
Petersen interviewed people for her article who said, “I don’t want to be sold to.” This sentiment, which was prevailing prior to the pandemic, is now ingrained. Ad messages that blared unconsciously in the past, have now jumped from obnoxious to trash.
Are You Still Working In the “I Piss People Off” Business?
How not to make trash and piss people off is the concern that marketers must bring forward now. There’s no room in today’s culture for more bullshit. We, the people, are fed political bullshit all day long and we are told stories over and over again that intentionally otherize our fellow Americans. We have a vacuum where honesty and integrity are largely absent, which means there is an opportunity to stand out simply by being real.
Patagonia began asking its customers to buy less gear from them a few years ago. Can you even imagine your company doing anything like that? Can you imagine an evolved corporate consciousness that puts people’s health and well-being first? This utopia would not only cut down on the number of things we buy but alter the quality and sourcing of the things we buy.
Walmart, for one, is richer than rich on the back of cheap. Amazon too. These companies do some things right, but their core premise is wrong. Shoppers don’t need lots more cheaply-made things that do not last (by design). More cheap shit for less is a lie and it’s been the prevailing lie for decades.
What about now? Is real and lasting change here? Is it at our doorstep? And what does it mean for you, for me, for our colleagues, our careers, and so on?
Retail Failure Is Contagious and Widespread
According to CNBC, the rug under retail has been pulled.
Neiman Marcus, Stage Stores, and J.C. Penney have filed for bankruptcy protection. Kohl’s earlier this week reported first-quarter sales were down 44%. Nordstrom, which is set to report earnings next week, said it is permanently closing 16 stores.
Macy’s said it expects to report an operating loss of $905 million to $1.11 billion, compared with net income of $203 million a year ago. And it has forecast first-quarter sales to be in the range of $3 billion to $3.03 billion, down from $5.50 billion a year ago.
These are the stores with deep pockets. Supposedly. What about Ma and Pa on Main Street? How many local retailers are going to survive this sharp downturn? There is plenty of speculation, especially about restaurants and hotels and airlines, but no one truly knows what’s to come. Will housing prices hold steady through the coming election? Will unemployment grow worse from here and by how much? Will those with no work lose their benefits, and if they do what happens next?
In Uncertain Times, Clarity and Leadership Are Needed
Uncertainty is not a great place to be when you run or own a business. Or when you need a new job. There are things that we all come to count on, like revenue, and when it goes away suddenly, the shock is real and the damage painful. Not knowing when the lost income will return, or where your next job or client is coming from is unsettling, to put it mildly.
People who have enjoyed well-paying jobs may soon find themselves on the outside looking in. When you get laid off or fired under normal circumstances, you can turn that into a new opportunity to join a better company or move to a new city. Right now, companies do continue to hire, but there are 30 million unemployed Americans, so the competition has never been stiffer.
For me, like you, this is far from an academic exercise. We all need to work and to earn. I believe there’s an incredible need for strong, clear, professional communicators, right now. But what will we be called on to communicate? It can’t be the same old, same old. Even though you know as well as I that it will be, at least to a large degree. It’s human nature to want to put things back where they were, to restore order. Let me put this into an advertising context for you.
The headline, “Soon Friends…Very Soon” in combination with the lifestyle photo says all will return to normal any day now. The owners of a resort must believe that, and I do believe that people of means want a vacation this summer.
Nevertheless, things are not going back to normal. Not now. Here in Austin, the word is no gathering larger than 2500 people until 2021. That means no, or few, fans at UT football or basketball games. No ACL Fest, and so on. So yes, perhaps some can escape the new reality and jump in a pool and splash around. I like doing that, but I also like to understand how to navigate a tough situation.
Marketers may or may not reset their tone, and reconsider how they speak to people. I do not expect many to get on to Patagonia’s page and admit that customers do not need more, they need just enough.
When it comes to advertising vacations or travel, I offer the following advice. Make your pitch about how vacationing is a family tradition and that will not change. What changes is how it’s done. Without knowing how Padre Island, La Cantera, or any destination plans to keep people safe, how does any considerate and cautious person book a vacation there?
As advertising providers, are we now ready to ask our clients to dial it back a bit? If there was ever a “less is more” moment, this is it.
Also, advertising that pretends that nothing happened, or that it’s all good now is like a wet fart in church. Today, brands must speak clearly and honestly about why they matter. If you’re with me on this, and you want my direct help with it, or want me to point you to others who can help, please reach out.