APRIL 7, 2009

Recession Successes

While the bad news about the economy is inescapable these days, I’ve actually been reading a fair amount lately about industries that are bucking the trend and faring better in the recession. I find these stories interesting - where do people turn when they are sacrificing in so many other areas of their lives? Which activities and products are filling the void, and why? Let’s take a look.

Dating Sites: According to The Economist, traffic to online dating sites has gone up markedly since January 2008. What accounts for the sudden increase in interest in finding a mate? The article has a few theories: 1) people have more time to devote to their private lives now that they are working less; 2) trying times make people more desirous of companionship and stability; 3) living alone is expensive; and 4) the difficult economy has strained many marriages, unleashing newly single people in search of dates.  One fact I found pretty interesting: eHarmony has noticed that “the number of visits to its website was higher than average on days when the Dow Jones Industrial Average fell by more than 100 points.” I guess searching for a boyfriend online is preferable to watching your 401(k) shrink even further.

Candy: People may not be able to afford fancy restaurants or exotic vacations, but they can still afford candy. Gothamist reports that “anxious New Yorkers” have caused local candy retailers to increase their orders by up to 10%, and The New York Times, which also wrote about this trend, says: “For many, sugar lifts spirits dragged low by the languishing economy. For others, candy also provides a nostalgic reminder of better times. And not insignificantly, it is relatively cheap.”

Do-It-Yourselfers: Advertising Age (registration required) predicts that an upward trend for do-it-yourself products and services will linger “well into the next decade” Some of the companies and industries benefiting from consumers’ desire to do things by themselves: home hair care, cooking schools, Autozone (which teaches visitors to fix and maintain their own cars), WebMD, and Howcast (devoted to how-to videos). The New York Times also reports that craft stores like Michaels fared better this past holiday season than the season before, and online craft marketplace Etsy has seen a rapid increase in listings and transactions.

Netflix: The Popwatch blog reported last week that Netflix just shipped its 2 billionth DVD. (The lucky movie? “Nick and Norah’s Infinite Playlist”, which was sent to Clay Shannon of Birmingham, Indiana). Forbes has also reported on Netflix’s strong growth during the recession - and I think it makes perfect sense. You may not be able to afford a babysitter and a night on the town, but a Netflix membership at $18 a month is an affordable way to make staying in more appealing.

I’ve also read that Wal-Mart, McDonalds, and Campbell’s Soup have been strong performers during these rocky times. Value, comfort and predictability - these attributes seem to be resonating with anxious consumers. It will be interesting to see who else emerges if the recession wears on.