Though we’ve recovered for the most part, a few industries haven’t exactly gone back to business as usual since the crisis of 2008. At the height of it, the retail, travel and restaurant industries took drastic measures to keep us spending. This meant offering deep discounts and catering to our increasingly impatient attitudes, and when it was over, we expected this level of service to continue. So, they had to rethink their way of doing business.
When Lehman Brothers filed for bankruptcy on September 15, 2008, just a couple of months before the holiday season, it brought spending to a halt. This left retailers with so much stock that they were forced to slash prices by as much as 80 percent (instead of the usual 50) in order to draw in shoppers. The massive discounts taught consumers that there was no need to pay marked-up, or even list prices, and those deals stuck around well past December.¹
Declining sales forced many retailers to close low and underperforming stores. As shops were shut down, retailers began to push online shopping. By putting their products online, they’d found a way to reduce overhead and continue to offer the kinds of discounts we had come to know and expect. Enter Amazon. Now a major online retail giant, selling everything from laptops to lava lamps, Amazon has trained consumers to expect products cheaply – and quickly!
The crisis also created a shift towards a more casual style of dress across all income brackets. Millennials may have had something to do with this trend. Many of them had difficulty finding work given that they were trying to do so during the biggest economic downturn since the Great Depression. This delayed their entrance into adulthood, affecting the kinds of attire they were purchasing, thus shifting what retailers would supply. The trend caught on with all ages, and many people now wear jeans to the office or upscale restaurants without anyone batting an eye. This has reduced the need for so much dressy – and expensive – attire.
Department stores like Macy’s, Saks and Nordstrom have responded and started pushing their own discount models since sales began to stagnate in their premium stores. In the third quarter of 2018, Nordstrom generated roughly 30 percent of its sales through its off-price business, Nordstrom Rack.¹
The travel industry saw a decline not only in vacation travel, but in business travel as well. Travel company stocks were hit even worse. From January 2007 to March 2009, airline stocks declined 68 percent while hotel, resorts, and cruise lines fell by 74 percent. In the years that followed the crisis, the hotel and airline industries have seen cyclical recoveries in line with the broader U.S. business cycle.²
While the number of brick-and-mortar travel agents has continued to decline since the crisis, there’s been new growth in online bookings. The shift to online travel bookings is a long-term trend that was slowed, but not interrupted, by the global financial crisis.
As a result of the crisis, new startup-led markets emerged, like apartment sharing. This was a response to the demand for more affordable travel accommodations, and their popularity has continued to grow ever since. Enter Airbnb. Airbnb answered the call of a new kind of consumer. One that had become more frugal and preferred experiences over luxury. Founded in late 2008, the company has since exploded and now boasts over five million online listings and $2.6 billion in gross bookings.²
The airline industry, known for its flimsy profit margins, lost a collective $24 billion in the U.S. alone during the crisis, creating a margin of negative 13 percent. Carriers stemmed their losses in 2010, but still struggled to make money as they were faced with near-record-high oil prices, low-cost carrier competition, legacy labour contracts, and slow consumer recovery. This led to several bankruptcies, restructurings, and consolidations in 2010-2013.²
The industry has since turned around, earning a profit in recent years thanks to an increased number of passengers, lower costs, and moderate oil prices. Discount airlines such as Ryanair and Air Canada Rouge have managed to keep ticket prices low – and their popularity high – by reducing freebies and charging fees for baggage and seat selection.
While things are looking up for the time being, climbing fuel prices are re-emerging as an area of concern, and it remains to be seen if airlines will be able to pass on these growing costs to passengers.
A CNN Money report from mid-2008 noted that casual dining chains were taking a major hit as people turned to cheaper food alternatives, which meant an increase in fast food sales. A number of restaurants were forced to close, with many of them filing for bankruptcy. By mid-2009, things began to slowly turn around and the restaurant industry has been growing – and changing – steadily ever since.³
In recent years, a new trend in dining has emerged which is a direct result of a change in people’s grocery shopping preferences, namely, buying organic. An ever-growing demand for organic, locally-sourced foods at the grocery store has forced restaurants to provide the same. This has spawned an increase in farm-to-table concepts that focus on healthy ingredients and environmental sustainability. Unlike the trend in cheaper retail, this is an area where people seem willing to spend a bit more to ensure they’re getting quality, ethically-sourced food.
Another trend that’s significantly influenced people’s dining patterns is social media. Restaurant marketing has experienced a paradigm shift over the past ten years, which has caused businesses to rethink their advertising tactics. Social media has become an essential part of restaurant marketing, and restaurants are now tasked with more than just advertising their services. They’ve got to post quality content and reach out to foodie influencers to help bolster their reputation. This means an independent food blogger, TripAdvisor, Yelp, or Zagat review can make or break a restaurant’s reputation.
Along with being present on social media, a more tech-savvy approach is now needed as consumers grow increasingly impatient. Amazon Prime offers delivery in two days and online grocery shopping has become much more common. This has created a demand for a new kind of restaurant; one that lies somewhere between fast food and fine dining. The concept of “fast-casual” dining has mushroomed in recent years, combining a slightly elevated in-house dining experience with quickness and convenience.
According to Restaurant Business magazine, fast-casual chains grew sales by 8.9% in 2017.³ In keeping with preferences for a more casual style of dress, people like having the option to dine out without having to dress up.
Dining in has also changed drastically, with a vast array of meal options now available in addition to the standard pizza and Chinese food that were once the mainstay of the takeout world. Delivery services like Foodora, Uber Eats, and Eat Now are dedicated to bringing you almost any meal you could purchase at a sit-down restaurant, to be enjoyed in the comfort of your own home. And you can arrange it all with just a few taps on your smartphone.
Prefer to kick it old school? Now you can quickly – and affordably – make your own meal at home using services like GoodFood and HelloFresh. These companies deliver expertly curated, ready-to-cook recipes with all the necessary ingredients right to your doorstep.
Where are these three industries headed next? With the increase in drastic weather patterns, technological advancement and continuously evolving societal preferences, it’s anyone’s guess. Perhaps Elon Musk will have us jetting off to the moon for lunch, sporting an elaborate – but eco-friendly – space suit that was made in our own home on a 3-D printer. As long as they’re not serving soylent green, I’m in.
Lucy Conte, Editor-in-chief
This article was published in T.E. Wealth’s Strategies newsletter, December 2018 edition. Read the full edition here.