This is getting serious.
According to a report from the US Federal Reserve the Average American Family’s net worth had already plunged almost 40% by 2010! Today, that average net worth is the same as it was in 1992.
Or, put another way, all that hard work involving long hours, few holidays or advanced learning (think Business Management courses) has been for naught.
Every reliable present and future indicator trends downward. The Report itself was compiled over a three year period. It is about ‘wealth destruction’ on a massive scale.
Much of the ‘eco-babble’ in the US these days has concentrated on the 1% who own just about everything. The Report suggests strongly that the crisis in many American homes has been brought on (or, at the very least, substantially caused by) the on-going global financial crisis.
And, if that wasn’t enough it would seem that the deterioration in net worth will continue for the next ….. (put your best guess here (√ ) in percentage terms.)
One really should not be making light of this situation. Much of the debate about consumers in the world’s advanced economies has focused upon the wealthy and the nouveaux-poor. Less is being spent on the High Street, and a higher proportion goes on necessities such as food, energy, cars.
The wealthy – not very surprisingly – are little constrained by hard times for others. In a world of private planes, bespoke clothing and several homes there is limited opportunity to meet economic betas other than in performing their roles as employees, servants, etc.
The big name fashion brands: Chanel, Bulgari, Lowe for example cater for that small group who have the money. But, it’s often overlooked that despite their specific markets most of these companies are today subsidiaries of very large corporations – they have deep pockets and a customer base that will spend if – and when – they feel like it.
There are also what might be called the Mega Mass Market brands: the likes of Nike, Puma and Ray-ban. Apart from the not very original observation that this list slants heavily towards footwear overall demand seems to have held up reasonably well.
Small- to Medium size fashion suppliers find themselves in something of a bind.
The traditional markets of Europe, the US and Japan that previously took almost everything these companies produced are now scaling back. There is very little likkelihood that they will return to boom conditions anytime soon – if ever.
SO, WHAT TO DO?
With markets so fragmented,and global demand diminishing by the day (or so it seems) where should that SME look for new markets?
Well, one place he should not look. Let’s rephrase this: he should place little reliance on exporting to Europe, the US or Japan. Basically, these economise are ‘shot’. Sales can still be made, but they are likely to prove conracting in both volume and value over the near future.
And, keeping the best ‘til last: there are the new emerging markets. Their Middle Class have the money and, of equal importance, a readiness to spend. The fact that these nations are among the world’s most populouse – like China, like India, like Indonesia. like Nigeria, like Brazil …. Well, you see where we’re going.
Er, Where are we going?
For starters there’s the All China Leather Exhibition, running 4 – 6, September 2012 in Shanghai. It’s the one time of the year when smaller companies – armed with nothing other than good products and keen prices, can get in front of major Chinese buyers.
And, for those seeking openings in a Pan-Asia setting will exhibit in March next year at the APLF Leather Fair in Hong Kong.
As one door shuts (slams)!, others open: but you’ll have to put your shoulder to it.