Five recession-proof businesses: the rundown
The worldwide recession has hammered heavy industry, with car sales evaporating into thin air and consumption of "treats" like new clothes and fancy coffee down sharply. But there are a few industries that stand tall during a recession, and there are numerous theories as to why they do so. Here's a quick count down:
Although game sales dropped in March after showing year-over-year increases in January and February, if you look a little more closely at the data, you'll discover that Easter was in March last year, and April this year. Why that's relevant to video game sales is that they tend to pick up around Easter. We'll have a clearer picture when April's figures come out. Also, March 2008 was when Nintendo's Super Smash Bros.' Brawl was released. It was the fourth biggest selling game in 2008, so this March couldn't really expect to compare to last.
“They buy the Wii games that they buy for the same reason that people go to McDonald’s,” Michael Pachter said on consumers. Further elaborating on his comparison of the two companies, he said, “McDonald’s doesn’t win a lot of restaurant critic awards but they are approachable, they’re consistent, and you know what they’re going to serve you.” He says that if the “concept is right,” the “recognition factor” is there, and if “you can ‘get it’ from what’s on the box,” then “sometimes the game doesn’t even have to be that good in order for it to sell.”
As for this year's games, zombie splattering game Resident Evil 5 sold 1.5 million copies making it the number one selling game for March. Apparently
people's need to kill zombies is fairly constant despite what the economy is doing.
Worldwide, McDonald's reported same-store sales growth of 4.3% in the first quarter, with gains everywhere except China and Germany. There are several reasons for this. People are "trading down" to less expensive fast food, and plenty of people conclude that they can't make a comparable hamburger at home - particularly the popular McDouble - for the same price. The product mix at McDonald's has shifted to less expensive items, and people have responded by increasing their consumption of these items. One other factor is that in many markets, standalone stores are keeping their drive-thru windows open 24 hours a day.
Consider a few recent UK headlines:
UK ON ALERT OVER MAFIA TURF WARS (Hey, it's in all caps. That means it's really bad.)
Blunt as it may be to say so, when banks aren't lending, the mob steps in to fill the demand. However, the current downturn is particularly brutal. Rumour has it that some mobsters unable to pay off their loans are having to break their own thumbs. (ba-dum-dum-KSSSHH!)
UK supermarket behemoth Tesco may as well be Teflon-coated, for all its ability to let the current recession roll off it. Annual revenues are up by 13%, and pretax profits are up 5.5% over last year. Tesco employs 283,300 people in the UK, second only to the National Health Service. While other supermarket chains such as Sainsbury's, Morrison's and Asda are weathering the recession fairly well. During economic downturns, supermarkets have to walk a fine line between keeping their profits healthy and being dragged into a price war with other chains. So far, the ones in the UK are holding up well.
Although a Bloomberg story from last November reported that "Five British pubs are closing their doors every day, according to the British Beer & Pub Association," the same report says that the reason pubs are less crowded is that people have found it more cost effective to drink at home.
Diageo, owner of brands such as Smirnoff, Gilbey's, Gordon's, Jose Cuervo, and loads of others, have not been hit hard by the recession because presumably, even cost-conscious supermarket shoppers have their limits, and aren't about to experiment with discount hooch when the economy's circling the drain. Besides, distillers usually make their profits from store sales rather than from pubs anyway. So there you have it. Brits are drinking as much as ever, they're just doing it alone. Feel better?