The middle is the worst place to be in a recession
If you are worried that the economy is swinging south (and you along with it), then you had better make sure you aren’t stuck in the middle. In fact, many companies are already seeing this happen, even though we are not “officially” in a recession yet.
I have been doing a lot of informal research and watching the business news pages, and the evidence for why you don’t want to be in the middle is everywhere. Mercedes dealers (at least those who were strong dealers during the good times) are either even or ahead of last year, while almost everyone else including powerhouse Toyota is having a tough time. And that’s not because Mercedes customers are wealthy enough to not worry about the economy. Their real strength has been in customers trading up from other cars to buy a Mercedes, especially the new “C” Class. Toyota, on the other hand, is seeing sales slide downward, not just in total numbers but also thrugh trading down from their best-selling Camry to the Corolla.
High end grocery stores are doing much better than their middle-of-the-road competitors. Go into any Trader Joes, and there’s no shortage of customers. I finally picked up a magazine to read as I waited in line the other day. You can also go into the super discount stores that sell leftover products from other grocers, and the crowds are increasing. It’s the middle guys that are gettin hurt. The Wall Street Journal just had an article on July 18 about Safeway, that venerable giant, losing sales to lower-priced competitors.
The point is: if you want to do well in a recession (or even a non-recession like this one), you need to get out of the middle and either strengthen your Alpha Assets to become more of a leader or give up and commit yourself to being a scavenger or survival brand. If you stay in the middle, you will get hurt badly, if this non-recession carries on longer than a few months.
So, as politicians try to believe that being in the middle is the safest place to be this year, don’t take that advice for your company. Commit one way or the other.