How Cutting Costs in a Recession can do More Harm than Good

I read an excellent post in Monica O'Brien's "Resourceful Marketer" blog and I think everyone should check it out, "4 lessons from the food industry on how to make money in a recession ".

It’s too bad her insights can’t be found in textbooks! I think she had some really good advice that totally hitting the nail on the head. I agreed that cutting back in a recession is not always the way to go, and we can learn from other industries and apply that knowledge to our own.

Just the other day, I went to Home Depot - and it made me think about her post. Has anyone been to Home Depot lately? How do you think they are handling the recession?

I’m not sure how they are doing at the corporate level (had to shut down their Yardbirds and Expo Design Centers, etc), but this is what I noticed at the local HD I went to:
#1 Not Busy at all
#2 Way more sales associates than needed
#3 Everyone lined up, very nice, and ready to help

This was the first time I’ve ever gone to a Home Depot and WANTED to shop there. They were so helpful… and I bought so much stuff…

And it made me think - a person like me would normally avoid Home Depot (long lines, too many people, inconvenient, poor customer service, etc…) - and it is the current conditions at HD that is causing me to shop more there. I wonder how much this is the case for others… It wouldn’t surprise me if HD’s sales are up (in comparison to Lowes for example), because through employment of a better customer experience, HD is actually encouraging more sporadic spending from consumers.

Had Home Depot slashed its work force, I can’t imagine receiving the same level of service that I did, and I couldn’t see myself spending as much money as I did there. I think the average consumer would tend to have a similar reaction - and so in this case, it is clear to me that NOT cutting expenses (more layoffs) in a recession might actually be helping Home Depot survive.

Had I not read Monica's post before going to Home Depot, I probably would not have made the observations that I did – and so I thank her for her insights, because they get me to think about things differently!

Can’t wait to read her next post, and I definitely think you should all take a look!