Recession = Devastation!
The recession hit a lot of companies very hard in 2012. In the UK alone, numerous big high street names were forced to shut their doors. From the massive electrical store Comet to the huge sports seller JJB, dozens of other companies were forced to call in the administrators. 2013 looks to take many more, with the news today of Jessops (photography) looking to follow suit. Many others face an extremely bleak outlook: Optical Express, Hein Gerrick, Clinton Cards, Game Group etc.
To put it bluntly, online competition is destroying most high-street retailers. The low operating expenditure and cheaper labour (from abroad) enables online ventures to easily undercut established high-street brands.
Recession = Opportunity
The recession has undoubtedly changed most people’s attitude towards finance in some way. Although not necessarily direct, the recession has affected us all in some way; from one extreme of being made unemployed to the other of no longer being able to shop in your local deli store – there is no avoiding the effects.
Detriment aside, the recession has actually led to fruitful growth of a select few companies in ‘niche’ sectors. Consider the following sectors and the positive growth they have seen over the last year:
Payday Loan Companies
For those of you who have been around here a while, you will know that I absolutely despise Payday loans. In my opinion, the interest rates are absolutely criminal and I can’t see how they could ever help someone in difficulty. Unfortunately, the recession has caused increasingly more families to live paycheck to paycheck… and sometimes not quite making it. Consequently, payday loan companies have made a small fortune by ‘plugging the gap’ with a short term loan.
Comparison Sites
As people are finally becoming more financially astute, they realise the great deals to be had with comparison sites. From credit cards and loans to house/car/pet/breakdown insurance; numerous comparison sites have made a fortune in referral commission from top insurance companies. A win-win situation in my opinion! Just be careful to inquire direct too – prices can fluctuate!
Online Entertainment
Games like bingo from Ladbrokes and Texas Hold’em Poker have seen a huge rise in popularity. As technology and internet connections become more reliable, online gaming and entertainment has seen huge growth. This includes streaming movie / TV services like Netflix and Lovefilm. I predict this will see the extinction of movie rental shops in the next year or so.
Discount Stores
Although not always the cheapest places to shop, discount stores are becoming increasingly popular. From Pound shops / dollar stores to discount supermarkets, one thing is for sure; we all love to think we are getting a bargain. Be extremely careful when shopping in discount stores. Promotions are often exaggerated or pack sizes / portions reduced to subconsciously trick people into thinking they are getting a better deal. It is a widely known fact that chocolate / sweets manufacturers create custom sized packets for some discount stores in the UK – say 6 bars instead of the standard 10 from the supermarket – to enable them to undercut supermarket prices for a ‘pack’. In reality, you are paying much more on a ‘per item’ basis. Be diligent in checking your cost per portions! My general rule of thumb is that because supermarkets have much higher buying power than any other outfit; the likelihood is that the best deals are to be had there.
Energy Companies
The recession has hardly touched the big energy companies. People still need to heat their homes and cook themselves food – these companies have an almost guaranteed income! In fact, energy companies in the UK have ignored the fact that people are struggling to make ends meet, with some companies raising prices by over 10% last year!
Tech Companies
As digital forces the ‘real-world’ to close down, it is no surprise that dozens of tech companies experienced fantastic growth rates in 2012. Forbes listed the highest growing tech company in 2012 as LinkedIN, with a sales growth rate at a staggering 115%. Perhaps everyone is updating their CVs and doing an extra bit of networking as a precaution to what may lie ahead.
Don’t forget Apartment REITs. People often sell (or get evicted) from their homes and move into apartments during down-cycles.
Come to think of it, REITs in Canada have done amazingly well for the past 4 years.
REIT = Real Estate Investment Trust.
It’s “flow through” for tax purposes.
thestarvingartistcanada recently posted..FOOD: saucy!
Ahh! Good addition there…. I know a lot of UK investment funds have equities in REITs… seem to be a pretty ‘safe’ investment option! 🙂
Recession has taught me to take nothing for granted, but also to take advantage of opportunities. I had a bit of cash and was able to invest, as they say when other cry you should buy.
Pauline recently posted..$1000 giveaway! What are structured settlements?
That cool… how does the tax / earnings on your blog and investments work from paradise?
I pay property and rental income taxes in the countries where I have properties and then income tax in France and UK depending on who pays me. A bit complicated with 3 tax years and 4 forms to fill, luckily most of it can be done online.
Pauline recently posted..13 money resolutions for 2013: #6 crush your debt!
That sounds like a logistical nightmare!!!!!!!!!!
I would also add mom bloggers who specialize in coupons and saving money. Wow, did that take off and now many get paid nicely through endorsements and product reviews. As well as online properties that specialize in saving consumers money. Interesting time to be alive.
Kyle @ Rather-Be-Shopping.com recently posted..Best of 2012: Dad Bloggers Group
V good point Kyle… hopefully we can be added to a new category in 2013 of PF bloggers that made our millions 🙂
I work in a recession proof industry- the mortuary business. No matter what is going on with the economy, people still die. People *might* have a little less money to spend but I haven’t noticed anything drastic.
HollyClubThrifty recently posted..My Escape from Hotel Hell
I actually thought of you when I wrote this Holly, thinking that you would at least be safe. People don’t really think or care about the costs involved so much when someone close to them dies. Pleased to hear your livelihood is protected!
The recession has definitely affected my company. I work in the manufacturing sector, primarily servicing housing and commercial/institutional buildings. As new housing development dropped off, so did our sales! Fortunately the company I work for is privately held, and is in a strong enough financial position to weather the storm. Hopefully it improves soon!
Jordann @ My Alternate Life recently posted..Lump Sum Payment or Structured Settlement? ($1000 Giveaway!)
Sorry to hear that Jordann… Hopefully things are on the mend now, but at least you are fortunate to work for a company that could survive it. I work in the Oil/Energy industry so didn’t even notice a different… others weren’t nearly so lucky. Did you notice a difference in Freelancing Income?
I only started freelancing in the last six months, so I can’t speak to how that has been affected by the recession.
Jordann @ My Alternate Life recently posted..Lump Sum Payment or Structured Settlement? ($1000 Giveaway!)
Fair enough… to be honest I am the same Jordann… if this is a recession, I can’t wait to see how things are when we are in prosperous times! I have countless advertisers in touch all the time! Imagine how good it could get! 🙂
Apparently someone who used to work as an engineer at my company left several years ago to open a payday loan company and has been rolling in it ever since. I personally find them pretty unethical, though I very much understand risk-adjusted lending rates and their calculations.
Anne @ Unique Gifter recently posted..eBay Savings Tips
I completely agree that it is unethical Anne… I don’t advertise or endorse them. Shame Kerry Katona does.. did you hear about the outcry from MPs in the UK?
Are there still movie rental shops in the UK? Both in my old neighborhood and my current town, they’re long, long gone here.
AverageJoe recently posted..2014 Tax Season: 5 Steps to Make Next Year’s Taxes Suck Less
Yes! There are actually… I am not surprised to hear that they have already shut down in some places… it’s only a matter of time!
This is sectors that grew. If you broke it down further, you will find that some individual companies have continued to grow as well as individual states. Apple and Texas both come to mind.
Thad recently posted..How Eliminating Wheat From Our Diet is Changing My Family
You are absolutely right Thad.. I am really talking about sectors! Texas is a giant… the Oil didn’t see much of a downturn and Apple just defies all trends anyway! 🙂
One thing that many are missing in what is happening in Texas regarding oil is the paradigm shifting growth of shale plays, specifically the Eagle Ford shale. Totally new field bringing oil and gas at amazing amounts.
Thad recently posted..Guest Post: Why Restaurants are Moving to Mobile Payment Systems
It will be even more interesting watching how Europe’s (particularly Germany and France) attitude towards Shale and fracking changes over the next few years or so! Germany has a HUGE resource of unconventional plays that are just waiting to be developed!
West Texas apparently has a huge non-conventional field right in the middle of the Permian Basin (location may be different). And Texas does energy very well!
Thad recently posted..If You Only Read One Thing Today | January 15th Edition
And the Gas prices in Europe are MUCH higher
The S&P500 went up 15.21% in 2012. Most of the big companies (represented in that index) did really well.
The ASX200 (Australia’s equivalent) went up by almost exactly the same amount.
Stocks in Germany and Japan did really well too.
Much of the concerns are about US Government spending and debt I thought. Individual public companies did really well in 2012.
James @ Free in Ten Years recently posted..Building a raised garden bed using recycled materials
I didn’t realise the S&P went up as much as 15.21% … That is fantastic! Personally, I have my money in Asian investment funds… I have an average of 5% gain in the last 2 months.
… and the FTSE 100 did 7.75% which is pretty handy for all the doom and gloom.
James @ Free in Ten Years recently posted..Building a raised garden bed using recycled materials
Exactly! Compare that to the standard 0.5% for most online savers…. hmmmm