The US economy has been slowly, but constantly, recovering from the economic downturn of 2008. Even so, consumers are still afraid to spend money because the economy has not improved sufficiently enough for consumers to start spending instead of saving. This is bad new for companies in the Household and Personal Products industry, because the economic expansion is causing the price of raw materials to go up, according to happi.com. This will cause the price of the finished product to go up, therefore consumers are less likely to spend money on those products. Even so, suppliers are confident that eventually the continual economic growth will cause consumers to pay for those products regardless of price.
Even though the economy is still suffering, the HPP industry should not suffer significantly, as recent consumer trends towards environmentally friendly cleaners and all natural beauty products are increasing sales even though these products usually cost more. This causes companies to differentiate themselves by advertising the fact that they get their raw materials from a certain country where a certain ingredient is well known to do a certain thing for someone's skin, and no other company does that. It also helps if the company devotes itself to sustainability or being environmentally friendly, like Proctor and Gamble, who devote a third of their website to sustainability. Big companies like P&G bring in billions of dollars each year, but for some reason, it doesn't seem to drive out the competition from smaller companies completely. According to First research by Hoovers Inc, small firms can compete with big firms by offering products unique to their own company. So it appears, even though there is a little trouble for the HPP industry right now, in the end there is a great deal of hope and prospect for economic growth within the HPP industry.
Sources:
http://www.happi.com/articles/2011/03/suppliers-remain-optimistic
http://www.firstresearch.com/Industry-Research/Personal-Care-Products-Manufacturing.html
http://www.happi.com/articles/2007/01/good-enough-to-eat
http://www.happi.com/articles/2008/12/cleaning-products-go-green
This sort of relates to part of what I spoke to the person I did my informational interview on about. I interviewed a woman who works in the finance department at Reckitt Benckiser and while we were talking she mentioned the current state of the economy and the company. Fortunately for this industry, personal products are something that people can not usually afford to stop buying. Therefore even in bad times or if prices slightly increase, people usually continue to buy these products, especially from well-known and trusted brands. She emphasized that companies do everything they can to continue turning a profit and keep customers.
ReplyDelete