Even as retailers struggle with a technology-disrupted business model and changing consumer desires, at least a generally positive overall economy and low unemployment rates seemed to keep shoppers’ wallets open.
But a 2019 that started with stock market losses, a recently ended (but longest-ever) government shutdown, and other headwinds might now force consumers to pull back on spending.
“The big question is what’s going to happen with the economy,” says Michelle Bacharach, founder and CEO of FindMine. “Are we going to have a recession? What does that mean for our customers?”
At the World Economic Forum’s annual Davos gathering last week, business and economic leaders agreed that economic growth was slowing, and that even if the underlying economic fundamentals remain strong, consumer sentiment—over trade wars with China, the stock market’s decidedly bearish turn at the end of 2018, or lingering effects from the shutdown—could fuel behavior to tip the economy into recession.
“I think the underlying economy is OK,” said David Solomon, Goldman Sachs’s CEO, according to CNBC. “The issue is when you think about the government shutdown, you think about the 90-day deadline on trade, you think about the negotiations of Brexit, you look at some of the bigger macro issues that are out there. … A combination of things not going the right way will have an impact on markets and will have an impact on sentiment.”
Even Janet Yellen, former chairwoman of the Federal Reserve Bank, expressed concern at the National Retail Federation’s annual conference earlier this month that businesses are putting off investments due to the uncertainty.
Scott Emmons, chief technology officer at TheCurrent Global and the former innovation lab head at retailer Neiman Marcus, cautioned against pulling back from technology investments if consumer spending slows or retreats. “You have to not put yourself in the position to burn the furniture to keep the lights on,” he says. “Innovation investments, focused on the right places, can lead to efficiencies that accomplish the same goals that straight up cutting costs do.”
FindMine’s Bacharach says she is focusing on a strategy that helps her company better cope with economic weakness: helping shore up the e-commerce company’s retailers and other vendors. “How do we help them make more money through the [return on investment] that we offer?” she asks.
FindMine is an e-commerce startup that uses machine learning and artificial intelligence to help shoppers find clothing items that can complete an outfit. The startup’s customers include brands such as John Varvatos and Adidas, which use FindMine to encourage shoppers to make “complete this look”-type purchases: a blouse with a skirt or jacket. The idea is that consumers buy more than one item if they are shown other clothes that make up an entire outfit.
In addition to providing technology and content that can drive additional sales for FindMine’s retail customers, Bacharach says it’s in her company’s interests to find ways to help adjacent vendors like Perch, a maker of online storefronts. “If it benefits Perch, it benefits FindMine; it benefits retail, everybody wins,” she explains.
Bacharach says nurturing the ecosystem of startups, retailers, and brands in e-commerce could help keep sales steady in a challenging economic environment. One tech tool she says FindMine is using marketing software that updates the content in an email sent to customers by retailers to the time at which a person clicks on the content, not when the message was sent.
“Otherwise, the sale might be over or the promotion might have ended, and that’s the content the customer is getting,” she says. Instead, the new marketing technology provides fresh, useful information to customers, she adds. “It could be a style guide for outfits, like ‘here’s 10 different ways to wear this pair of pants,’” she says.
