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Kai Ryssdal: There comes a time in every recession when companies just have to roll the dice. Make those investments, buy that inventory, or pay for those ads. And hope consumers are going to be in a mood to start buying again sometime real soon. We thought we saw some signs of that in our morning meeting today, so we’ve called Bill Patterson to check our instincts. He’s with the market research firm Mintel International. Good to talk with you.
BILL PATTERSON: Hi Kai. How are you doing?
RYSSDAL: I’m well. Listen, I wanted to chat for a second about a couple of items ripped from the headlines today along these lines of how companies bounce back from this recession. The first one is John Mackey, the CEO of Whole Foods. Quoted today in the Wall Street Journal, talking about candy, and how the store is going to get healthier again. He said, “We used to just sell healthy food. But we know it’s not enough. We sell all kinds of candy. We sell a bunch of junk.” And this is the CEO of the company. What kind of marketing strategy is that as you try to get out of this recession.
PATTERSON: It makes me remember the comment by Gerald Ratner when he said that his jewelry company sold a lot of junk, and it did him no favors at all. But I think John Mackey is in a much better position. He’s right in the right place now, because they need to do something to turn their company around.
RYSSDAL: Do they risk perhaps losing more people than they gain by fessing up in a way?
PATTERSON: I don’t think so. Really, the story with them is that back in pre-recession times we had a situation where the consumer was desperately looking for natural, organic, and Whole Foods was satisfying that. When the recession hit it really seems that the pocketbook started to talk, and a lot of consumers started saying, OK, we’ll forgo that because right now it’s more important that we balance our household budgets. Right now it seems to be that most economists are saying the recession is starting to bottom out. And if that’s the case, then from a consumer-demand perspective, we’re expecting to see that pent-up and latent demand for natural organics start to grow again. And frankly if Whole Foods can revamp themselves now, they should be well placed to take advantage of the rebound when it comes.
RYSSDAL: Let me try another one then on you, Bill, Procter and Gamble announced a deal this morning with the National Football League. It’s going to provide Head and Shoulders and some others of its products to be locker room products for the NFL. As one editor put it around our table this morning, is aligning yourself with sweaty, hulky guys a way to sell a product coming out of a recession?
PATTERSON: The first thing you gotta remember, they’ve suffered from again, this kinda of recessionary mindset we’ve had, where people have been moving to private label. Because we’ve seen a lot of growth in private label.
RYSSDAL: When you say private label you mean generics, and something cheaper basically.
PATTERSON: Store brand, yes. And they need to do something to address that. I’m frankly always surprised by some of the associations that get developed. But we certainly see from the sales figures that they seem to work. I guess if you’re talking about personal care products, and you’re cleaning up a bunch of footballers, then it seems to be a pretty good match.
RYSSDAL: Is what we’re seeing here companies figuring out how to get back into the economy, as consumers look a little more ready to spend?
PATTERSON: The issue with consumer spend is very much driven by confidence. And the smart companies will in fact already be looking forward to the time when the purse strings start to loosen up again. So companies really need to be on their toes right now, because the consumer is going to be switching their behavior. There will be some residual effect of the recession mindset, but keeping a really close eye on consumer sentiment, consumer mood and consumer patterns is going to be really key.
RYSSDAL: Bill Patterson. He’s a senior research analyst at the Mintel Research Group. They’re an international market research firm. Bill, thanks a lot.
PATTERSON: Kai, thank you.
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