Planet recession

A crystal ball would be good right now, you could predict what's going to happen should a recession hit. You could safely take a punt on stocks that plummet in the knowledge that they will rebound, sell your house high and rent before buying again when the price is right and other such dodgy dealings.

Brandsmiths, a brand management company, appear to have that crystal ball and have sent out a press release telling us all who will survive and thrive, and who will wither and die, during the big R.

Survivors are tipped to include Ikea, Starbucks and Tescos and witherers could include Haagen Daas, KFC and Woolworths. Except that being a creative group of people they have gone for a more out of this world approach. 

They have come up with seven brand planets:

Modern Classics - Levi's, Time Out, Penguin Books. "They'll survive a downturn, but are undoubted merger or acquisition targets," according to Chris Cleaver the MD of Brandsmiths.

Dominators - Ikea, Starbucks, Tesco. "Smart, sharp, quick on their feet, prepared to stand their corner. Sheer muscle will help them batter their way through any sort of recession."

New Heros - Innocent Drinks and Green & Blacks. "They'll make it through a recession, but they'll also be seen as acquisition or merger targets by businesses who need a little edge to get them through difficult times."

Wallpaper - Haagen Daas, KFC, Woolworths. "They were once beacons, but now they are trapped, living off the glory days of old...At best everyone needs at least a paint job, at worst a complete makeover."

Icons - Stella Artois and Walkers Crisps. "Recession will appear to simply pass them by."

Nadir - Disney, Dixons and FCUK. "They're too big to buy, too big to collapse, so they'll drift through a recession, and perhaps even simply disappear."

Reinvention - Puma, Nestle and McDonalds. "Their ability and agility will drive them through a recession, probably without them noticing one ever passed by," says Cleaver.

But are they right? We might not have long to wait and see.

Comments

[Thomas]

Hello, I'm a bit confused by something here - how is that brands like Disney, Dixons and FCUK are "too big to collapse" but still liable to "perhaps even simply disappear"? Like, they might just vanish one night?!

I wonder whether these retailers are in the same "solar system" as the rest of us?

I'd ask Brandsmiths but then I don't receive their press releases..

[James]

Thomas,

The reason is simple, companies can have a massive turnover and huge assets and hence be worth too much money to be bought. But if they are cashflow negative, i.e. they spend more than they make then they can go bankrupt same as any other company and hence disappear. The assets will be sold off in a fire sale probably. Ford is a good current example of this, they probably won't go bust because of new strategies etc but they are in the position described above where they are haemorrhaging money but still worth an awful lot.