The Consumer discretionary sector is one of the first sectors to gain momentum at the beginning of an economic cycle and one of the first to decline toward the end. To maintain investor confidence throughout market shifts, consumer discretionary companies must keep their shareholders informed as to how they plan to adapt.
Will they narrow their demographic focus as consumer budgets tighten and overall demand wains?
Will then retool their product or service to address more of their consumers’ direct needs vs. wants?
Will they trim their liabilities?
These types of forward-thinking questions must be addressed with investors to maintain stability through economic cycles.
As noted above, the consumer discretionary sector encompasses those industries that tend to be the most sensitive to economic cycles. Its manufacturing segment includes automotive, household durable goods, apparel and leisure equipment. The services segment includes hotels, restaurants and other leisure facilities, media production and services, and consumer retailing and services.
Within each of these industry segments, a unique game plan must be developed to exectute a successful investor relation campaigns.
For example, in some cases you may want to push more content through social media influencers, and in other cases you may want to distribute content through more traditional press releases.
Further, in some cases, you may need your message to be direct and to the point, and in other cases you may need our message to be in the form of narrative.
Whatever your industry, you must craft your IR campaign to speak to your investor demographic.
When crafting investor communications, consumer discretionary companies must address macro-level consumer trends to maintain long-term confidence.
Today’s investors have become keen to the fact that a company’s ability navigate through “big picture” issues can be just as critical as navigating through day-to-day operational challenges.
Below are three macro-level trends that consumer discretionary companies are wise to address.
1. Environment Awareness
Investors want to know whether you are operating in an environmentally conscious manner – as they know that consumers are growing increasingly sensitive to this issue.
Consumers prefer products that were made with sustainable methods and have the least environmental impact possible. Companies have to keep up with these demands in order to remain relevant. For example, in the automobile industry renewable energy is considered one of the biggest transformative technologies. Cars that are more eco-friendly and fuel efficient are likely to be preferred by consumers. And in the footwear industry, consumers demand sustainable products, such as shoes made with organic cotton, recycled rubber, and plastic materials to replace traditional leather.
If you are making changes to your products, or the way you produce your products, to decrease your environmental footprint, this needs to be communicated to your investors just as much as it needs to be communicated to your customers.
2. Changing Population
Investors want to know whether you are preparing for demographic shifts.
The market for consumer discretionary products and services is becoming increasingly segmented. On one hand, there is a growing older population that has certain preferences for more traditional legacy products and services, and on the other hand, there is a younger generation that is more technologically savvy and requires that legacy products be constantly improved, if not reinvented. Investor want to know that consumer discretionary companies have a thorough understanding of the market segment they are targeting, and that they are developing products and services to server their preferences.
Your understanding of the habits, needs and wants of your target demographic needs to be communicated to your investors just as much as it needs to be communicated to your customers.
Investors want to know how you are leveraging technology to stay ahead of your competition.
Technology plays a key role in the way consumers make purchases. Online sales within the consumer discretionary sector are already outgrowing traditional retail sales.
If you are integrating new technology to design, build or sell your products and/or services, again, this needs to be communicated to your investors just as much as it needs to be communicated to your customers.
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