Why some businesses are “recession” proof?


I wont stop buying a toothpaste.

I wont stop buying groceries.

I wont stop communicating.

I wont stop commuting.

Businesses that cater to certain needs in the market place would never see drastic drops in their volumes. Yes there would be a drop but only marginal. In most cases though, growth pattern is maintained.

Indian Telecom is a good example where service operators are constantly adding new numbers. And falling ARPU is not because people have stopped using or reduced their usage.

Read yesterday that Automobile market grew in India. So obviously people are still buying cars and bikes.

And contrary to what airlines might say, spend some time at the airport and you will notice that crowds have not gone down.

Neighborhood grocery store still does good business.

However, there are always some organizations or brands that seemingly dont do well even in the recession proof sectors

Hero Honda is doing well… Bajaj is not.

Maruti is still leading the pack.

Retail formats are suffering, grocery stores are not.

Jet is supposedly in trouble and low cost are doing well.

A scan on Travelguru indicates that average room rates have not come down.

Is there a mantra that some know and others dont?

Its pretty simple actually. In times like these, an average consumer will not take risk and strong brands will continue to do well. Times like these, the buying decision is driven by the principle of minimising risk. Of course in some of the categories even that doesnt matter.

The sectors where recession impacts the most is where speculation prevails. And that of course led to the economic melt down. Real Estate, Finance and Investing and the entire eco-system that got bloated around these sectors.

And then businesses which thought they knew it all and were not much in tune with what the consumer was really looking for. Glowing optimistic reports are taken at face value and reading between the lines is kept for the period when things go wrong. Hindsight…

Business is not about here and now. Business is about modelling around the upside and downside. In an upbeat economy… no one wants to talk about downside and of course in a meltdown… even the media wont talk about any upside (and there would always be upsides)

A simplistic view this… minus any jargon and profound thinking.

And every company that is cutting down investment on their biggest assets – Brand and people… they will lose out in the long run..

What Me worry?


 picture courtesy - http://www.leconcombre.com/concpost/us/postcard4/alfred_e_neuman.html
picture courtesy - http://www.leconcombre.com/concpost/us/postcard4/alfred_e_neuman.html

I don’t have to worry about the future.

It is in the safe hands of the great corporate leaders.

Leaders who pretty much have no clue about which way the economy is going to swing a year from now. If they dont have a clue, then how can anyone expect me to have a clue about where I will be a year, three years or five years from now! And all HR people in the organizations… please remove this question as a ‘must ask’ question from the list of questions for potential candidates.

Read the statement from Mr Tata in this morning’s newspaper and I am left with a boggled mind! If only they had known about the possible economic melt down!

While I have great respect for Mr Tata, his statement pretty much symbolizes the business thinking of corporate India. Or for that matter Global Corporates too.

Back in college we used to have case studies on how to evaluate complete environment for business decisions. Current environmental conditions as well as possible future trends… It used to get drilled into us. But I guess… like all things theoretical, even this goes out the window in real life…

When JLR was bought, the signs were there. Global automobile industry was not exactly in the pink of health… Probably¬† Mr Tata’s think tank was oblivious to that or blind perhaps (takeovers I guess give a great adrenalin rush). And I am absolutely sure that there would have been few voices which would have been against the deal (and they are probably having a laugh somewhere in corporate gulag)

But the point here is that if a corporate like Tata’s can make a mistake (and owning up does not make a difference) then why blame other corporates for any kind of myopic view.

And ending this post on a funny note… this morning’s newspaper also ran a story on the respect that Indian corporates elicit in the world. Tata’s are number 11!