Industries That Thrive During a Recession

I had a conversation with a friend about industries that thrive during a recession.

Our discussion looked at the big picture of trends in a recession. There are a lot of valuable points made by my friend.

Among the those:

  • Discount retailers like Wal-Mart and The Dollar Store do well in a recession because they can leverage the economies of scale provided by their distribution power. They can negotiate, buy in bulk, and have the added advantage of being known in the marketplace as a low-cost provider of goods.
  • Sin industries also do well: alcohol, tobacco, and chocolate, just to name a few. Gambling typically suffers. Microluxuries keep people feeling better as they combat the economy’s stress, pressure, and anxiety.
  • Service Industries take a beating as many people look to do things themselves to save money. Some industries see an upswing in business: home renovators, auto repair shops, and technicians that maintain company infrastructure like machines, computers, etc.
  • Some plot along with garbage removal, pharmaceuticals, tax preparers and others like them because they are seen as needs, not wants.
  • And of course, many businesses use a recession as an opportunity to start a business or grow an existing business to take market share away from competitors. McDonald’s did this in the 1970s during a period of stagflation (slow growth with a healthy dose of inflation), and Toyota did it during the 1990s when it began building production plants in the U.S. as the Big Three were hurting (things haven’t changed much since then have they?)

How Do You Use This Info to Help YOU?

  1. When looking at the macroeconomic picture, see what changes occur and where trends are heading.
  2. Find a way to position yourself in front of a trend, so you rise with it. Keep in mind the old cliche: “a rising tide floats all boats.”

I hope you found the info in this article useful; please share your view about this topic by adding your comments below.

Take a look at the previous article about student loans – The Next Financial Crisis – you may find it interesting to read.

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Tags: recession

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