Who Likes a Recession?

Some businesses will be growing when the economy stalls. Read this from my email to see if you are one of them:

Some Businesses Welcome a Recession

Workers on Wall Street are worried they could lose their jobs. Builders are concerned there will be no buyers for the condominiums rising into the city sky. And restaurant managers are pondering cutbacks as regulars are eating in more often than out.

Career counselors, supermarket owners and discount retailers have another view. For them, the bad times could be good.

"With economic adversity can come opportunity," says Marshal Cohen, chief analyst at retail trend tracking firm NPD Group Inc.

Some businesses have already seen increases, while others are sure that gains lie just around the corner. As news of gas price increases, mortgage mayhem, a housing slump and layoffs spreads, consumers have shifted their shopping habits. For the first time in more than a decade, they rank low prices as the No. 1 factor in deciding what to buy and where to buy it, according to the 2008 AlixPartners Consumer Sentiment Index, a survey of more than 7,400 consumers.

"People are going to be trading down," says Fred Crawford, managing director at AlixPartners. "The value players are the ones who will do well."

Career adviser Roy Cohen's phone has been ringing steadily, with employees from Bear Stearns, Citibank and Merrill Lynch on the other end of the line seeking advice.

"Whenever there's unresolved fear in an organization, you have employees who are nervous," he says. "One way to address that nervousness is to take some initiative and control so you feel you're in the driver's seat."

The possibility of widespread financial industry layoffs has also been a boon to executive-job Web sites. In March, eFinancialCareers' resume database grew at a rate double that of a year earlier. Unique visitors to the site were up 63 percent in the first two months of the year. At TheLadders, a site for professionals earning $100,000 and more, job seeker sign-ups increased 112 percent in the first quarter of 2008 over the preceding quarter. Member page views were up 20 percent.

Costco, BJ's get a boost
Consumers looking for bargains helped boost March sales at Costco Wholesale Corp. stores open at least a year by 7 percent, with strong gains in deli, produce, bakery and frozen foods. Same-store sales at BJ's Wholesale Club were up 6 percent in March.

"People will look to stretch the dollar further," says Ira Steinberg, vice president of Jack's, a 99-cent store on West 32nd Street in New York. "We can be helpful with that." Lisa Lackey, an owner of Kappy-Cua Video in Washington Heights, says more customers are renting popular television shows like The Wire and The Sopranos and forgoing costly cable service. Plus, she says, spending $4 for a video during these tough times is a lot easier for a family to stomach than $50 at a movie theater.

New York City's supermarkets are expecting gains. "From past experience, what happens is we tend to do well when people cut back," says Howie Glickberg, owner of Fairway Markets. Though he's yet to see a major upswing in sales, Steve D'Agostino, director of operations for D'Agostino Supermarkets, says people will eat out less and spend more in the supermarket to try to make their money go further.

Downturns also help auto repair shops, as consumers hold off on purchasing new cars. "Our business thrives in a recession," says Dave Sorbaro, owner of Mavis Discount Tire. "When somebody's not buying a new car, to spend $500 or $600 on your current car seems cheap."

Gas prices a factor
New car sales plummeted last month, but Mr. Sorbaro says the current slowdown could come with a twist for repair shops. High fuel prices may drive cars off the road, muting the benefits of a recession.

For those who are just too stressed out by the economy, there's always exercise or alcohol. Fitness clubs have seen an uptick in business from those looking to sweat their way out of the swoon.

For others, drink is the answer. "People spend more on alcohol when times get tough," says Frank Badillo, senior economist for consulting firm TNS Retail Forward. At Bar Sepia in Prospect Heights, Brooklyn, owner Delissa Reynolds says customers have packed into her bar not only for the drink, but also for a sense of community.

To be sure, if the recession is deep, even the winners' gains could be wiped out. Customers who opt for supermarkets over restaurants could start trading down within those grocery stores. A $30 bottle of olive oil could turn into a $10 one.

(Source: Crain's New York Business, 04/12/08)

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