Just like the rest of America, I was shocked to see the major US banks post huge profits. These are the same banks that were about to fail a few months ago if swift inputs of huge cash infusions were not made immediately.  My concern is what the effects of this huge shift would be on the retail community.  Here are a few of my thoughts:

1.       This does nothing for credit availability for retailers to work from. At the same time these behemoths were posting huge gains, CIT was entering bankruptcy. These profits were from trading which is the exact source of the meltdown in the first place. These banks are not making profits by loaning money to buyers or store owners!  These profits don’t mean our economy is any stronger than it was.

2.       There is a rapidly growing class warfare brewing in the country. A few years ago people were hopeful of becoming rich themselves so they were hesitant to be critical of a class they aspired to. Now with huge unemployment, foreclosures and the appearance that the bonus class will prevail on the backs of the majority, resentment and animosity is at high levels.  When hope dissipates it is replaced with despair.

3.       This despair may be more widespread than people realize and it is not based on net worth or income. It is based on a sense of control and priviledge.  There are many wealthy business owners that are frustrated by trying to get capital, depressed by falling profits and scared by the huge amounts being spent by government with the promise that their taxes are going up.  They feel out of control and very nervous about what the future holds.  They resent the seeming control that the banks have in the government and financial institutions.  There are more and more taxes and restriction on businesses while the banks flit unfettered in their actions.

4.       The more depressed, frustrated and confused people are, the less likely they are to spend their money.  The less likely they are to go out and shop. That means that retailers must make a greater effort to reach these people with a positive message. Retailers may need to abandon their old myths and drag these people kicking and screaming out of their comfort zones and into stores to have a good time.  Shopping may be incidental.

Some retailers are getting on the side of the “downtrodden” whether they truly are or just feel that way. The market is changing and buyers thinking is vastly different.  Make sure you are adapting to those changes in your marketing, message, merchandising and strategy!