The Consumer is King
by Lee Rafkin
The Consumer is King
Sixty-five thousand Americans have lost their lives. Thirty million have lost their jobs. U.S. GDP is estimated to decline 40% in the second quarter, the worst economic performance in U.S. history. And yet, there are hopeful signs. Social distancing seems to be working. The curve is flattening. Some states are opening. There are positive signs that economic activity is starting to pick up.
So now, the big question is, “When will the economy recover?”
In an attempt to answer this question, I looked back in history to the 2008-2009 Great Recession. If there’s one thing we learned from the Great Recession, it’s that the United States is a consumer-driven economy. Consumer spending makes up about seventy percent of all GDP. When the consumer spends, the economy grows. The consumer is king. Consumer confidence, followed by consumer spending, will eventually lead us out of this economic crisis.
It’s important to note that comparisons to past history are only directional. Our current crisis is unlike any other. It really is unprecedented. We have a global health crisis that has triggered a global economic crisis. Until our health crisis is addressed, our economic crisis will linger.
Maslow’s ‘Hierarchy of Needs’ helps to put this in perspective. According to Maslow, humans are motivated by physiological, psychological, and emotional needs, with basic physiological needs at the bottom of the pyramid dominating all others. Maslow established that until basic human needs like food, water, shelter, health and safety are met, people will be unable and unwilling to move up the pyramid to higher-order needs like belonging, prestige, and self-esteem. When higher-order human needs are met, people feel more secure and more confident, and consumer confidence leads to consumer spending. Said a different way, until people feel more secure and hopeful about their future, they will not start spending again.
This is what happened in 2008-2009, when financial markets, banks, and entire industries teetered on the brink of collapse. Some people lost their jobs, their homes, and their life savings. Consumers responded in predictable ways. They lost confidence in the public institutions they had previously trusted to protect them. They returned to basics. They became more insular. They reduced spending, avoided debt, and economized more. An entire generation of Gen X and Millennials who came of age during this time were permanently impacted. At the peak of the financial crisis in 2009, as Barack Obama was entering the White House, the U.S. Consumer Confidence Index fell to its lowest point since the survey was created in 1967.
The good news is that it took only 18 months for the U.S. economy to recover. By acting quickly and decisively, the Obama administration is widely credited with avoiding a financial meltdown and saving the economy. This built consumer confidence that better times were ahead, and eventually, people started spending again.
So what can brands do in the near term to help the economy recover? Brands can connect with consumers, acknowledge the situation, and appeal to human emotions. Feel their pain. Empathize with their feelings of anxiety and uncertainty. Build trust by showing people that you’re not trying to sell them stuff, but instead, you care about their well-being. In whatever way works authentically for your brand, reassure consumers that you are genuinely committed to their health, safety, and security.
The consumer is king. And if history is any guide, the consumer will lead our economy back to health. To make this happen, brands should start at the bottom of Maslow’s pyramid and make people feel more confident and secure. If this happens, economic recovery and a return to normalcy will not be far behind.
Lee Rafkin is a branding, marketing, and communications consultant who has worked in the U.S. OOH industry since 2011. In addition to advising leading brands like Bank of America, Aetna, Johnson & Johnson, and Pepsico, he named and branded the OOH organizations OUTFRONT, Geopath, and Boldsite Media. Lee can be reached at firstname.lastname@example.org.
The views, thoughts, and opinions expressed belong solely to the author, and not necessarily OOH Today.