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Retail Watch : Find the Next Big Thing During Bad Times

June 2009 By Peter Berghammer

There’s no reason to repeat all of the bad economic news we’re already inundated with. What’s worth discussing, though, is what lurks beneath the surface of the gloom and doom. What you find are hints of potential and optimism.

There have been several indicators that small rallies in the markets could emerge during the next few months. Before we start popping the corks, though, we have to keep in mind that a branch of market research called wave analytics indicates that rallies presage deeper drops. But that’s only one theory of economics. Many other theories state that small rallies are signs of lasting strengths that can lead to eventual turnarounds.

With that said, some of the more recent economic news can provide hope to retailers. One sign of positive movement is Dow Chemical’s acquisition of Rohm and Haas. Such movement between two significant manufacturers is a clear sign of confidence that the consumer sector will rebound sooner rather than later. Bear in mind that these two giants offer a broad range of products that are directly used in everything from compact discs to semiconductor components to automotive and aerospace products.

Furthermore, the banking sector has shown some small signs of life. Citi recently showed a profit, which offers some hope to the general markets. Whether the profit is “real” remains to be seen, with analysts deeply divided on the actual longer-term outcome.

Weathering the Storm
How should retailers and the rest of the CE/Imaging industry respond to these contradictory reports? The answer is not to hunker down and wait for the worst to pass. Many of today’s most respected businesses started during recessions and depressions. Everything from business computing—IBM and Apple—through aerospace—Boeing—began during significant downturns. Other businesses, such as Amazon and eBay, really didn’t come into their own until they experienced at least one downturn.

Taking the analogy further, some of today’s most experienced and trusted names—Sony, Panasonic—did not re-emerge as powerhouses until they lost everything during a war.

Depressions and severe recessions always signify deep societal shifts on local, national and global levels. Whether it is a transition to an urbanized economy, a move from an agricultural base, a shift toward high-tech or, most recently, the emergence of Internet-based efficiencies, downturns always signify big structural changes.

It’s often difficult to predict what those specific changes will be. Most broad characterizations, such as “this downturn means the beginning of a new globalization”, aren’t very helpful. In the past, IBM correctly identified the changes in mainframe computing, which eventually revolutionized business computing. Apple placed its bets on personal computing, helping to evolve and change that and other related markets. Boeing focused on increased government spending on aircraft and defense.

The point is that those companies pursued opportunities that were a bit different or subsets of the initial market changes. Within our world, the big question isn’t “if” there will be the next game-changer, it’s “when” and “what” it will be. That’s because there is always a rebound and there is always opportunity. Despite the state of the economy, there are still venture capitalists out there willing to support a strong idea backed by a solid business model. Established companies are still investing in the future.

Everyone involved in this industry has to look at new areas to incorporate into their existing businesses. Yes, we all have to trim costs and seek new efficiencies. But that doesn’t mean we should stop looking for the next big thing.

Peter Berghammer is CEO of Huntington Beach, Calif.-based Copernio, an IT solutions company.


 

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