by Mary Clark

Created on: January 13, 2009

Not all businesses experience a slow down in sales or growth during a recession. Some actually experience an increase in their profit margin because of the recession. They are able to retain existing customers and draw in new customers, while other companies must hold on tight, and hope to ride out the rough economic tides before them. This leads us to ask why some companies fare better than other ones.

The consumer holds the key. When times get tough, the tough get going so they say, but where do they go? They head straight down the path that allows them to know a few feel good moments in their worrisome day. Companies with the ability to offer the consumer a diversion from their financial fears and reservations are the ones who can profit during a declining economy.

McDonald's stock rose again today and the company maintains a positive, global outlook going into 2009. They have made some changes to their dollar menu and had to increase the price on a few of their regular menu items but store-to-store old Ronald is turning a profit and has plans to expand. Why are they prospering? Their brand is synonymous with comfort. They provide comfort food, which people crave when times are tight and they do it while remaining affordable, regardless of economic trends. Companies offering simple comfort thrive.

Likewise, companies peddling diversionary wares thrive. The sale of alcoholic beverages and cigarettes increases during a recession. Smokers can nearly double their intake of nicotine when stressed. A pack a day smoker may realize that they need two packs just to make it through their day.

Companies furnishing products that allow the consumers to indulge themselves experience a sales boom in the middle of a recession too. Just walk into any convenience store and you will see the shelves lined with products that will sell well in any economy. A quick chocolate fix will not make filling up your tank any less painful on your pocketbook, but it is indulgent and when times are tight, the majority of consumers go for the little things that make them feel better. Consumers will scarf up everything from soda pop and potato chips to candy bars and little Debbie cakes because they can justify these feel good purchases that cost little more than a dollar apiece.

Dollar and discount stores do well in a slow economy too as do home improvement stores. Thrift stores, second hand shops, and consignment houses see a rise in clientele however, at the same time they see a marked decline in donations because people are hanging on to what they have.

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