A rocky road to recovery

As the world appreciates the return of the Republican majority in the US Congress, gold remains the evidence that investors are betting that printing money is not the best solution in the longer-term.

Around the world traders are looking closely at Ben Bernanke’s statements with jaundiced eyes as Quantitative Easing gets another $600 billion rush.

This has not stopped the customers from going out to the malls as they sent the shellacking needed by the Obama message that they want job security not bank guarantees. Sales at retail chains rose for the 14th straight month in October, led by Limited Brands Inc and Gap Inc, as discounting to clear inventory for the holiday season brought out consumers.

Retailers beat predictions in August and September as discounts boosted back-to-school shopping. Promotions lured consumers last month as well, helping some chains such as Gap that had weekly sales, according to Brian Sozzi, a retail analyst for Wall Street Strategies Inc.

Gary Morgan says that we will need to wait until next week’s Roy Morgan Consumer Confidence to see how Australian consumers react to Glenn Steven’s attempts to ‘slow down’ the Australian economy impact on the confidence of the Australian population. Consumer Confidence has fallen marginally by 2.3pts to 127.8 to be virtually at the very high levels set two weeks ago (127.7).

The slight fall in Consumer Confidence came before this week’s decision by the RBA to raise interest rates 25bp to 4.75% and was driven by a fall in the number of Australians feeling good about their financial situations with 38% (down 5%) of Australians now expecting to be ‘better off financially’ this time next year and 31% (down 3%) of Australians saying they’re ‘better off financially’ than at this time last year.

Over the next few months we will see three key trends in the rocky road to recovery Increasing volatility in the equities market, the early onset of the silly season as bank bashing replaces volatility in the Parliament and the heavy emphasis of retailers on traffic generation through heavily discounted Christmas sales.

Smart companies will follow the directions that we have already been discussing – sales training and customer relationship extensions, management of terms of trade to bring forward orders and consolidation of import substitution opportunities that reflect the flight to quality and better quality gifts in the domestic market.

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Dr Colin Benjamin is an entrepreneurship and strategic thinking consultant at Marshall Place Associates which offers a range of strategic thinking tools that open up a universe of new possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship.

Email dr.colinbenjamin@marshallplace.com.au
Contact: CEO Dr Jane Shelton, Phone +61 3 9640 0099