Retailing: The Contrarian Strategy

Will this recession represent the cusp that will create paradigm-shift in consumer behavior?

NO! In fact, quite the opposite. It creates major opportunities. A large window of opportunity exists.

So long as unemployment remains moderate, and overall household incomes fall slowly, consumers' behavior will also change in line with overall discretionary income. Of course, elasticity curves will change shape, and there will be difficulties in ascertaining the shapes. Some products will move from inelastic to elastic demand. There will be fewer units pre transaction. Dollar values per transaction will decrease. Product choices will change. This will continue over at least two more years.

But fundamental consumer behavior will remain the same. Customers will still demand value, albeit at the lowest price-point possible. On major retailer estimates that half of their customers are either brand-aspirational, or affluent but price-sensitive. These consumers will still expect service as part of the value equation. What should not happen is, as quoted from the Globe and Mail "you still don't want to go into a Wal-Mart, not find any help, not find the goods you want, and wait 20 minutes at the cash."