Loeb: anticipate change to stay ahead of competition

Nation's Restaurant News, Oct 22, 1990 by Richard Martin

Loeb: Anticipate change to stay ahead of competition

Businesses bracing for economic downturns can thrive by spotting shifts in market forces ahead of the competition, journalist and radio commentator Marshall Loeb told recession-wary foodservice executives at MUFSO.

In times of "wrenching change," civilization makes its biggest advances, Loeb said, and "those of us who anticipate the changes and sensibly act upon them will not only survive but will prosper."

Loeb, the managing editor of Fortune magazine and a 34-year veteran of Time Inc. publications, urged business leaders to heed evolutionary trends in consumer and work-force demographics in formulating marketing and operating strategies.

The conservative leanings of the baby-boom majority and the growing clout of women workers and consumers require particularly close monitoring, he suggested.

Increasingly, Americans entrenched in middle-class comforts are "apprehensively fighting above all else to preserve those lifestyles" and are seeking support for "basic family values."

Loeb said women, who filled more than half the 21.1 million new jobs in the 1980s, will more and more wield their enhanced purchasing power to offset stresses on two-income families. "Convenience means everything to them," he remarked.

Two matters of immediate concern to business - recession and the Persian Gulf crisis - also elicited Loeb's forecasts. "We will indeed elude a classic recession," he said, predicting that the next year will see a 1-percent increase in inflation while interest rates "will tick up slightly."

The stock market, he further predicted, would "do very well" over the next two to five years if a shooting war is evaded and $25 oil makes a comeback.

However, armed conflict in the Middle East would lead to a "deep and prolonged recession," he added. "My heart tells me we will get out of this without a shooting war; my head tells me we can not evade a hostile situation."

Facing the specter of a worsening labor shortage, companies that manage to adapt technologies to enhance production and customer service "will prosper economically and inherit the future," Loeb said.

"In the United States we can anticipate a really stringent shortage of labor," he warned, stressing that the projected 15.5 million workers entering the labor force in the 1990s will fall far short of filling the 24 million new jobs expected to open up by the dawn of the next century.

"All in all, we will have to deal with a more demanding body of employees," who will seek shared authority and elevated compensation.

Meanwhile, Loeb said, the economy may enjoy some measure of relief from the burdensome federal deficit because of relative calm on another demographic front: From now through 2010 a "remarkably small generation" of Americans will retire, while the 75 million baby boomers at peak spending age will simultaneously kick in maximum contributions to Social Security.

If invested creatively and wisely by the government, that $150 billion-a-year surplus in the retirement fund could help shrink the deficit, Loeb suggested.

He said Americans are ready for any "reasonable and equitable" long-term deficit-reduction measures, including increased taxation. However, "ideally, every dollar in new taxes should be matched by $2 in spending reductions."

Citing one example of inequities that may impede the ongoing delivery of benefits to all citizens, Loeb advocated the denial of low-cost Medicare benefits to wealthy Americans who qualify for coverage. "Those are luxuries that the nation can no longer afford," he said.

However, Loeb said the country would still have to wrestle with "the biggest tax question," the frequently proposed national consumption or value-added sales taxes, which are frequently criticized for their potential to severely punish low-income consumers.

Returning to the marketing concerns of his audience, Loeb predicted that Americans would place increasing faith in product integrity and value. He envisioned a "dramatic expansion of the quality market" and said "consumers are showing a new, sophisticated awareness that quality is more economical and efficient over the long run."

Greater sensibility and conservatism in buying habits would spring largely from the effects of aging and family-formation among consumers in the youth market, which Loeb called the "over-the-thrill crowd." He said those parents would seek to raise the "super baby" but often would limit family size to one child.

Remedies for the nation's learning crisis are also on the horizon, he suggested, saying that young Americans increasingly "value a job and put a premium on careers and education."

Loeb concluded by painting an optimistic picture of America's future in a world where nations' economic and social advances will increasingly hinge on access to a particular set of domestic resources. The United States, along with Canada and Australia, would shine on the world stage, he said, because each possesses a rich agricultural base; energy-bearing raw materials; a full complement of vital natural resources; sophisticated technological and service infrastructures; and well-informed, skilled populations.