Effects of Flowering and Foliage Plants in Hospital Rooms

According to a new study recently published in HortTechnology, plants and flower in hospital rooms have definite healing benefits, especially for anyone recovering from surgery.

Researchers studied ninety patients recovering from appendectomy, assigning them randomly to hospital rooms with or without plants. During recovery, the patients were able to see eight varieties of flowering plants or foliage.

Scientists measured recovery times, heart rate, temperature and blood pressure, perceived level of pain, fatigue and anxiety levels. The results showed that plants and flowers facilitated recovery from abdominal surgery, as evidenced by less pain medication use, lower heart rate and systolic blood pressure, and decreased anxiety levels in the hospital patients who were exposed to plants and flowers.

In addition, the patients indicated greater satisfaction with their hospital rooms, when compared to the control group. The study concluded that plants and flowers are good medicine when it comes to promoting recovery from surgery.

Hat tip to Stan for the link!

Roundup on Retail

As projected, the media is focusing on the depressed holiday sales this year (see links below). I have talked with a couple of garden centers who indicated their holiday sales were strong. However, they happened to be located in areas where the downturn has been buffered somewhat (see previous post here).

• Retailers Brace for Major Change
WSJ, DECEMBER 27, 2008

• Bargain-Hunting Shoppers Turn Up Noses at Post-Christmas Sales
Bloomberg, Dec. 27 2008

• Amazon Claims ‘Best Ever’ Christmas (Whatever That Means)
NYT Bits, December 26, 2008

• For stores, a very un-merry holiday
CNN/Money.com, December 26, 2008

• Retail stocks suffer, some defy dismal sales data
Reuters, Dec 26, 2008

• Christmas Aftermath: Navigating the Gift Return
WSJ, Holiday Sales Blog

• Holiday Sales Tumble as U.S. Consumers Cut Spending
Bloomberg, Dec. 26 2008

• US-Holiday sales may be down 4 pct -SpendingPulse
UK Reuters, Dec 26, 2008 2:12pm GMT

• Amazon says 2008 holiday season was ‘best ever’
AP, Dec 26, 2008

• Fresh survey shows gloomy U.S. retail sales: report
MarketWatch, Dec. 26, 2008

• Amazon Lauds Its Holiday Sales
WSJ, DECEMBER 26, 2008, 9:41 A.M. ET

• Retail sales dismal in United States and Britain
International Herald Tribune, December 25, 2008

• Retailers slash prices to entice holiday shoppers
AP, Dec 26, 2008

• After-holiday prices reach ‘rock bottom’
THE TENNESSEAN, DECEMBER 26, 2008

• Visits to U.S. Retailers Fell 24% on Weekend Before Christmas
Bloomberg, Dec. 25 2008

• Retail Sales Plummet
WSJ, DECEMBER 25, 2008

• Early Reports Confirm Weak Holiday Shopping
NYT, December 24, 2008

White Christmas

Merry Christmas to all and best wishes for a prosperous 2009! Enjoy this rendition of one of our classic Christmas ballads!

Michael Porter on Charlie Rose

Michael Porter’s talk with Charlie Rose on the U.S. economy is getting a lot of buzz online right now. In the 25-minute interview, Porter restates his case from Business Week for why we need an economic strategy and talks about the systemic issues America faces, and its core strengths.

Some highlights: Porter says he’s excited by the potential for this administration to put together an overarching strategy that might address our problems in

• Public k-12 education;
• energy
• high cost of doing business
• lack of a safety net for workers during job transitions (healthcare security, training, pensions).

Porter says we have some strengths to reinvest in:

• our science technology system. investment rate has slowed.
• our belief in competition. We have in the last few years become more protectionist

The silver lining of the crisis is we might get an America:

• that saves again
• with a new sense of community responsibility
• and prudence in business

Porter says this crisis will cause others to doubt this system. This is best system we know for creating economic opportunity. this does not help the cause of capitalism in Latin America.

All in all, a good lunch-time listen. Or better yet, read his piece in Business Week, linked above. It’s a more cohesive argument and it won’t take you 25 minutes. Plus you’ll see some of his underlying logic, and learn interesting facts.

Put Your Best Foot Forward

Here is my latest column in the December issue of Today's Garden Center regarding the holiday retail outlook and strategies. Click here.

New landscape services report available

"Landscape Services Market in the U.S." is a new report just released by leading industrial market research publisher SBI, providing an in-depth treatment of this under-investigated market. Drawing from nearly two dozen sources, data is presented for the following categories: Market Size and Value 2004-2008; Professional Standing: Education, Certification, Employment; Major Trends Driving Industry Growth; International Aspects; Projected Market Forecast 2009-2013; and End-User Demographics. Click here to view other details.

Warning -- it's expensive!

Creative Destruction

The economist Joseph Schumpeter popularized and used the term creative destruction to describe the process of transformation that accompanies radical innovation. In Schumpeter's vision of capitalism, innovative entry by entrepreneurs was the force that sustained long-term economic growth, even as it destroyed the value of established companies that enjoyed some degree of monopoly power (Wikipedia).

More than 500 American automobile manufacturers failed over the last 100 years for one reason or another, or were acquired, primarily due to the Schumpeterian forces of "creative destruction." As far I know, not a single one of those auto manufacturers asked for, or was granted, government assistance, or received a government (aka taxpayer) bailout. Should there now be an exception for GM, Ford or Chrysler to get bailed out when none of the 548 defunct companies received assistance?

Graphically speaking...

The latest from Bill Conerly (click on each graph below to enlarge):

Getting it to market will be tougher

Trucking firms are downsizing rapidly. More than 130,000 big rigs (over 7%) have been pulled off the road already, and the figure will keep growing as the recession takes a toll. Many trucking firms will be forced out of business entirely and that will generate a huge shortage when the economy recovers. Demand will ramp up faster than capacity, so rates for moving freight will spike. Figure on paying about 10% more when the economic recovery is in full swing. Consider locking in a rate now. Offer to guarantee a minimum level of business in exchange for guaranteed service and limited price hikes.

Discounting can be dangerous!

During tough economic times, companies often rush to reduce prices on their products and services. That seems like common sense: People can’t afford to spend as much, so charge less to keep them buying. But discounting has its perils.

To be sure, discounting is effective when done wisely and strategically. It can get consumers excited about a product, encourage them to buy more, and help your short-term bottom line. However, whether the purchase is a hot dog, a handbag, or a stay at a five-star hotel, customers want good value for their hard-earned money. The price of something is often an important determinant of its perceived value, as Dan Ariely points out in Predictably Irrational. Often, the more consumers pay, the more value they ascribe to a purchase. If you discount prices purely to boost sales, buyers may begin to question that value.

Consider Abercrombie & Fitch, which lowered prices by roughly 15% during the 2000–2002 downturn. When the dust cleared, the company realized that it had sacrificed much of its brand’s cachet and lost significant market share. A&F didn’t recover until 2004—and then only after returning to higher prices. In August 2008, having learned its lesson, the company announced that it was considering another price increase, despite a decline in second-quarter profits. The goal: to enhance what the CEO called the “iconic status” of the brand.

But discounting is so easy that some companies simply can’t resist. Starbucks, which posted its first-ever earnings loss in July, has begun to offer lower-priced options, such as a cup of coffee for $1, with free refills. This strategy may boost sales in the short term, but we suspect that, as with A&F, it will hurt the Starbucks brand in the long term.

Discounting is not always a bad idea, though—there are safe ways to lower prices. Earlier this year, Chrysler discounted something that does not affect its core brand: gasoline. It guaranteed to purchasers of new cars a price of no more than $2.99 per gallon of gas for three years. The idea was to subsidize the fuel that a new car uses, not the car itself. It’s similar to what GM did in 2001 by discounting its financing rather than its cars. Obviously, the auto industry has more problems than brand deterioration. Nonetheless, this is smart marketing during a downturn: It couples the appeal of a discount with an implicit message about the value of the core product.

So if you’re eyeing a simple, traditional discount strategy during the present slowdown, first consider the potential for damage to your brand and then evaluate the brand insurance that a more nuanced approach may offer. If you inadvertently shatter your brand’s mystique, reestablishing the value proposition to consumers may be tougher than you expect.

Jeffrey M. Stibel and Peter Delgrosso in the latest Harvard Business Review.

Latest unemployment report not a good one

According to the BLS report yesterday, the latest job market numbers show a recession that's deepening. A total of 1.9 million jobs have been lost so far this year, with two-thirds of that in the past three months.

The Labor Department’s jobs data showed that the economy shed 533,000 jobs in November, the worst one month decline since December 1974 (though the number in 1974 represented a greater percentage of total workers, so the impact isn’t directly comparable). However, the composition of the declines was very different in the two periods. In December 1974, the drop in employment was almost two-thirds concentrated in the manufacturing sector, and less than a quarter in the services industry. The economy has changed drastically since then. Last month’s decline was less than a sixth in manufacturing, and more than two-thirds in services.

A loss this year of about 2.3 million looks likely, and losses in 2009 could total 3 million. The unemployment rate, which rose in November to 6.7% from 6.5% the previous month, is headed close to 9% in 2009. The losses are widespread, with gains only in education, health care and government.

As layoffs increase, incomes shrink and so does consumer spending, inducing firms to continue cutting payrolls. Making conditions worse are tighter lending standards by banks that hurt companies and their customers. While the rising unemployment rate is disturbing, it's still nearly four percentage points below the 10.8% peak hit at the end of the 1981-82 recession.

Expect the economy to possibly show some signs of improvement by summer of 2009, but remember that job losses typically continue for a while after a recession ends.

Black Friday and Cyber Monday sales strong

Though the holiday season is far from over, retailers across the country are breathing a collective sigh of relief after shoppers headed to stores and websites in droves over the weekend. According to the National Retail Federation's 2008 Black Friday Weekend survey, conducted by BIGresearch, more than 172 million shoppers visited stores and websites over Black Friday weekend, up from 147 million shoppers last year. Shoppers spent an average of $372.57 this weekend*, up 7.2 percent over last year’s $347.55. Total spending reached an estimated $41.0 billion. "Holiday sales are not expected to continue at this brisk pace, but it is encouraging that Americans seem excited to go shopping again." said NRF President and CEO Tracy Mullin.

It also looks like more people than ever spent the first workday of the holiday season doing something other than work on their computers. Online shoppers spent $846 million in the U.S. on 'Cyber Monday,' according to new comScore Networks data. That was a 15% increase over the same day last year (see chart above).

Sorry, couldn't resist

Ok, now it's official

The Business Cycle Dating Committee of the National Bureau of Economic Research met by conference call on Friday, November 28. The committee maintains a chronology of the beginning and ending dates (months and quarters) of U.S. recessions.

The committee determined that a peak in economic activity occurred in the U.S. economy in December 2007. The peak marks the end of the expansion that began in November 2001 and the beginning of a recession. The expansion lasted 73 months; the previous expansion of the 1990s lasted 120 months.

The NBER's historical business cycle data show that the average economic expansion since WWII lasted 57 months (4 years, 9 months). In that case, the current expansion is more than two years longer than the average expansion, depending on when the NBER decides the next recession starts.

For the complete NBER release, click here.

So the obvious question is...now what? Or maybe...so what?

Well, I think it's imperative that we keep the announcement in perspective in that it simply confirms what many have been saying/feeling for some time now. It's just that economists need data to confirm economic phenomena.

Your downturn strategy should remain intact, ... what do you mean you don't have one? Click here to review previous strategy-related posts to get you started.

UPDATE: I was asked this morning: Why did it take so long for the recession to become "official"?

Back in the 1920s, the NBER began a research program into our economic history, resulting in a set of dates of economic peaks and troughs. NBER has continued to update this chronology. NBER is an academic organization, and its business cycle dating program is a service to the scholarly research community. It is not meant to be a current commentary on the economy nor a forecast of future activity.

The committee wrestles with two issues when it sees a decline in economic activity. First, it asks if the downturn we're seeing will survive the inevitable data revisions. Second, if economic activity turns up tomorrow, will the downturn be significant enough that we will call this event a recession. Although it has seemed obvious to many that this is a recession, that's because no one expected a sudden turnaround. However, the committee does not use such a forecast in its determination. And being academics, there's really no hurry.

While wrestling with these two issues, the committee also deals with data that may be telling different stories. One reason it has not been obvious to me that we're in recession is that first and second quarter GDP growth were positive, with Q2 pretty strong. It's unusual to see such strong growth in the middle of a recession. However, the monthly data that the committee focuses on all showed pronounced peaks.

UPDATE 2: The next question I was asked was: So, when will the recession end? I could take the easy road out and say "see answer above." Instead, I'll opt for the second easiest answer and say that there are: (1) a lot of differing viewpoints out there, and (2) there are a lot of unknowns in the mix, and (3) the range of time frames I am hearing put us in recovery mode anywhere from 2nd quarter 2009 to late 2010. Needless to say, a rocket scientist could probably have figured that out. Personally, I think it's closer to the former than the latter time period.