Tuesday, February 17, 2009

Prediction - No-nonsense brands will prosper in 2009

In the article "Flight to value" here in The Economist's The World in 2009, it states:

"Any brand built around do-gooding notions of organic, corporate social responsibility, or caring for the environment may need to rethink, ... , as value of money rises up the consumers agenda."

Does that mean the dollar store styled value chains are going to prosper in the USA? The market seems to agree with this conclusion hence giving confirmation to the above article's conclusion - have a look at the Family Dollar Stores, Inc.'s (Ticker FDO) trading price and volume chart here for 2008 and 2009.

What about the luxury brands? The article states:

"Luxury brands are in trouble."

Yet, the following prediction in the article may be the one I would be interested in closely observing:

"... 2009 will see the arrival of big emerging-market brands into the developed world. ... Mahindra, an Indian conglomerate with a strong brand, ... will launch a small, fuel-efficient sport-utility vehicle in America."

I believe value will drive purchase intent, quality and/or brand will trump price in some cases and finally if the economic conditions continue to decline as they are, family budgets will be the final driver on decisions of the above two.

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