The 0.3% Solution

In good times or bad, a customer database is a license to do business.

Hub, December 8, 2008 — Research indicates that during the last two recessions (1990-91 and 2000-01), growth in every retail sector slowed. According to the McKinsey Quarterly, 93 percent of retailers surveyed experienced slowing revenue growth in one of the recessions and 59 percent found it true in both.

Unfortunately, it also takes retailers longer to benefit from the turnaround when it does happen. The average retail growth rate in the year of recovery in both 1991 and 2001 was just 0.3 percent.

Most of us start to hunker down and take a defensive approach to a recession. Obviously cutting costs where possible is common sense. But when it comes to marketing at retail, cutting back is a self-fulfilling prophecy to 0.3 growth.

During previous recessions, advertising, promotion — and most of marketing — were always the first to be cut. But this time, retailers with customer-specific databases are pushing ahead because they know who their customers are and what they buy.