I just read an article on Investopedia titled Industries That Thrive On Recession.
The article looks at the big picture when it comes to trends in a recession. There are a lot of valuable links in the article as well.
Among the takeaways:
- Discount retailers like Wal-Mart and The Dollar Store do well in a recession because they can leverage the economies of scale provided by their distribution power. They can negotiate, buy in bulk, and have the added advantage of being known in the marketplace as a low cost provider of goods.
- Sin industries also do well: alcohol, tobacco, and chocolate just to name a few. Gambling typically suffers. Microluxuries keep people feeling better as they combat the stress, pressure, and anxiety of the economy.
- Service Industries take a beating as many people look to do things themselves to save money. Some industries see an upswing in business: home renovators, auto repair shops, and technicians that maintain company infrastructure like machines, computers, etc.
- Some plot along: garbage removal, pharmaceuticals, tax preparers and others like them because they are seen as needs, not wants.
- And of course, many businesses use a recession as an opportunity to start a business or grow an existing business to take market share away from competitors. McDonald’s did this in the 1970’s during a period of stagflation (slow growth with a healthy dose of inflation) and Toyota did it during the 1990’s when it began building production plants in the U.S. as the Big Three were hurting (things haven’t changed much since then have they?)
How Do You Use This Info to Help YOU?
- When looking at the macroeconomic picture, see what changes are taking place and where trends are heading.
- Fnd a way to position yourself in front of a trend so you rise with it. Keep in mind the old cliche: “a rising tide floats all boats.”
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