“No worries, mate”

With consumer confidence showing a slight decline due to stories from Japan, Portugal and the Middle East, and the threat of great big new carbon taxes, there is a natural tendency for customers to zip their wallets and put their money under the mattress.

Smart companies should adopt a “no worries, mate” response despite these short-term trends but take into account that their sales efforts for the next three months will continue to be constrained.

Retailers recognise the slump in their sales is continuing because savings are rising at a time when the labour market is becoming sensitive to a national minimum wage. What is less clear is that there is still a very high level of consumer willingness to buy new technology, invest in property and look for quality products and services.

Gary Morgan confirms that consumer confidence dropped 2.6pts in a week to 116.2, driven lower by a fall in confidence about whether now is a ‘good time to buy’ major household items (54%, down 2%). Confidence in personal financial situations fell 2% with consumers saying their family is ‘better off financially than a year ago’ and a fall of 3% in consumers expecting their family to be ‘better off financially this time next year.’

The Reserve Bank is cheered by lower consumer expectations and the better than parity value of our dollar, to put an early rate rise on the back burner and encourage small business to go to their more friendly bank manager for good terms and conditions for investments other than property.

The best path to business development is less about the management of risk and more about capturing the benefit of sound planning and effective growth in innovation, creativity and entrepreneurship. As customers pay down debt and wait for the potential payouts in Wayne Swan’s budget reduction in government spending, there will be a steady expansion in domestic demand for locally manufactured and provided products and services.

Each of the major banks are recognising this shift in emphasis by placing key staff into their small business lending divisions and seeking a return of local branch managers (rather than just lending officers) into significant relationships with smart companies. Every small business with a good cashflow and good prospects for business expansion should immediately invite their personal and corporate managers to a long business lunch.

The keys to success in the short-term involve a return to the fundamentals of solid customer service and an outstanding willingness to reduce inventory, and an investment in productivity improvement.

In the longer term, however it is a case of finding new business partners, focus on relationships with up stream suppliers and down stream distributors profitability and performance to build competitive industry value chains.

For more Futurist blogs, click here.

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. Colin is also a member of the global Association of Professional Futurists.