Wine was served at The Fragrance Foundation’s State of the Industry Luncheon, held Thursday at The Harvard Club, but attendees may have needed something a bit stronger.
The news from the three panelists was just as sobering as last year’s event, hosted in the wake of Wall Street’s unraveling, when a speaker then forecast the unemployment rate would surpass 10 percent.
At this year’s panel — hosted by Bloomberg Television anchor Deirdre Bolton — Ken Goldstein, an economist at The Conference Board, declared, “A year from now, the employment rate will still be about 10 percent.”
Goldstein said, from a technical point of view, the recession likely ended in July or August. What consumers want to know, he added, is, “When will it feel like it’s over?”
Related Articles
The answer is, not for a while. Check back in 2015, perhaps. “This is a fundamentally changed world. It’s going to take awhile before we get over this.”
You May Also Like
Consumers already have hunkered down for a weak recovery, steadily pulling back spending and padding savings accounts. “Money saved is money not spent,” said Goldstein. “That’s why it will take so long for the economic engine to turn on.” For businesses, less money coming in means less resources to support new ideas. Something has to be taken off the drawing board,” he said. Importantly, there’s less money to add jobs. “[Recovery] is more about jobs than anything else,” said Goldstein.
Taking the podium after Goldstein, Wendy Liebmann, co-founder and chief executive officer of WSL Strategic Retail, quipped, “After that, anything is good news.” Also broaching the million-dollar question of how long will “this damn painful, good awful thing” go on, Liebmann said she advises clients: “Assume it’s forever, then you’ll be safer.”
Challenging GE’s chairman and ceo Jeffrey Immelt’s economic reset theory, Liebmann said: “This isn’t about a reset. There is no going back.…It’s about a reboot.”
To see the future, suggested Liebmann, beauty firms need to follow the shopper. According to WSL’s most recent findings, she’s continuing on her path of practically. For instance, 80 percent of women surveyed told WSL, “I don’t want to shop for anything I don’t really need.” And only 15 percent agreed: “I will go back to spending as soon as I can. I miss buying things.” Liebmann noted 38 percent have grown used to spending less, and don’t plan to return to the old habits.
“The elephant in the shopping bag is unemployment,” she said.
When WSL asked what they will spend money on first when the economy improves, number one on the list was vacation, followed by entertainment, clothing, salon services and eating out. “Experiences” seem to trump accumulation, Liebmann said, suggesting fragrance makers work to reclaim their sensory heritage.
Susan Babinksy, senior vice president of consumer products at Kline Management Consulting & Marketing Research Group, said for the $5 billion U.S. fragrance business, “the growth scenario has not been positive.” She forecast the business will decline about 8 percent this year.