I can’t believe I am writing a post on this but as there is so much jargon being used I thought it would be a good idea to know what it all means as it doesn’t matter what industry you are in Optical or not, it is the same jargon! However, the Optical Industry is in a much better position to make it through this recession than many other industries so let’s face some facts and talk about how to come out stronger. Here we go:
Bailout: Money given to a struggling business whose downfall could have dire consequences for the entire economy. Optical probably doesn’t qualify but we run our business better than the Big 3 auto makers and the Finance Industry. In October 2008, President Bush authorized a $700 billion plan but Optical won’t be getting a piece of this!
Consumer Confidence: A gauge of how good the average consumer feels about current economic conditions and future prospects. The monthly Consumer Confidence Index, a highly subjective measure that comes from a survey of 5,000 U.S. households, is closely watched by investors. It just hit an all time low which means consumers are less likely to buy anything that is considered non-essential. How bad is this for the Optical Industry? It is bad if eye wear if is viewed as a non-essential item. Eye health, good vision and products are necessities but we need to be reminding the consumer about this fact more than ever. They will be looking for value right now, not so much luxury items. Therefore, package pricing and promotions that offer great value are a must!
Deflation: A general decline in prices across the economy. When prices are falling, consumers actually spend less, as they wait for still lower prices or because the declining value of their assets makes them feel poorer. This decrease in spending in turn increases unemployment. The Optical industry has already seen a decline in consumer prices and we should probably be prepared for more but again promoting value and package pricing can help.
Depression: A severe, prolonged recession (see below) characterized by the decline or the failure of business or banks, high unemployment, falling wages, and general economic collapse. The last recognized depression in the U.S. was the Great Depression of the early 1930’s.
Recession: A significant, broad decline in economic activity lasting more than a few months. According to the National Bureau of Economic Research, the U.S. economy has been in a recession since December 2007. This is about the time we saw a softening in Optical product sales. This is the 11th recession since WWII and is predicted to be one of the longest. On average, recent recessions have lasted around 14 months.
Stimulus: A short-term government intervention to encourage spending and investing during a weak economic period. The $787 billion package enacted last week is a mix of tax cuts, health benefits, incentives, infrastructure and more. The key on how it all affects the optical industry really goes back to Consumer Confidence above, will this stimulus bring it back? No one knows yet. In the meantime, reminding consumers that their eye health and vision performance are just as important as ever and not a luxury might be the best way to communicate to the optical consumer in the current economic climate. We need to create our own stimulus package for the Optical Industry and we are in a better place to do that than many other industries. The better educated the consumer is about optical services and products, the better decision they can make about their purchases. Right now they need to feel good about spending money on vision care products.