ON BUSINESS || How to Spot a Market Opportunity During the Recession
Nobody’s looking.
When you see new products appear on the market that seems like a total no-brainer, you wonder why someone didn’t come up with it earlier—it’s because nobody was looking.
We were too busy playing on our phones.
Too busy getting swept up in the latest trends.
Too busy trying to get in on the latest life hack.
If only we had paid attention.
Right now is a great time to be paying attention. It’s similar to when Covid came along in 2020 and when the recession hit in 2008. It was an important time to observe market demands, but to be honest, I was too young to understand the market during 2008, and when covid hit, I was too involved with putting out fires in my own business to have paid attention to much else.
You need to pay close attention and map it out. Can you spot the gaps in the market?
But now, some call it the opportunity to make generational wealth. The possibility of, and the extent of the recession is still yet to be seen, but even in the first weeks of 2023, here’s what I’ve observed.
Steep discounts appeared during boxing week and continued straight through into January. The ‘everything must go’ trend in retail should be a warning sign regarding the true strength of the economy. When was the last time you saw such harried sales? We aren’t talking about ‘buy one get one free’ offers. We’re talking about 40-60% off merchandise.
Storefronts in popular retail areas have closed. Leases were likely wrapped up at the end of the year, but retail vacancies, both for shops and eateries, are headed for an all-time high. What I see is confined to the Canadian market, but I trust what I see more than what I read in the media. So, if you want to verify this trend, head out to your neighbourhood and see how many For Lease signs you see.
Firings continue late into 2022 and early into 2023. Is it only confined to tech as they say in the media? I recently read an article that did a great job of explaining why labour market numbers should be taken with a grain of salt.
Before Covid, small to medium-sized businesses filled positions through word-of-mouth and online advertisements. With the pandemic when networks became confined and everything shifted to online, more employers posted job openings online. While it is anecdotal evidence that small business owners used to fill job openings through their internal networks, if you’re the employer, look at how your hiring practices have evolved with Covid.
Hiring demands are disproportionately skewed toward hospitality and retail staff. Those who worked in hospitality got out of the industry; let’s face it, customers of retail and hospitality businesses have been misbehaving and treating front-line staff poorly by directing their fury toward them. Serving customers who are holding you personally responsible for situations you have little control over can’t be fun.
During Covid, people preferred to work from home, where it was comfortable and safe. After Covid, who wants to return to a 9-5 or another structured daily job? Experienced workers also took the pandemic as an opportunity to retire; this led to job vacancies that may still remain empty because it’s harder to recruit successors for management-level jobs. You can’t simply promote someone without experience into the role.
These are reasons why there is a continued labour shortage. It’s just harder to recruit when ther’s gap between employer and employee job expectations and needs.Interest rates are likely to continue its uphill climb, albeit at a slower pace. This means consumer sentiment will continue to be low, which impacts spending and saving patterns.
All these things point to weaker spending in the short to mid term. People are saving money due to uncertainty, and also because they have to service debts that were taken out at much lower interest rates. We haven’t seen such a situation since 2008, yet it is special in its own way.
Many people who are in the workforce have never experienced a market downturn in their careers. What’s in store? They likely have a vague reference point from hearing stories or reading about it. How would a recession make people feel? Would it exacerbate their already lack of confidence stacked on top of the daily comparisons they endure via social media?
Given this behaviour and market circumstances, where do you think the opportunities are? When no one’s looking, it’s your chance to grasp the market opportunity.
