Monthly Archives: November 2022

How retailers can win customers in a more challenging climate

As we enter this critical quarter for retailers, they are faced with a series of new challenges dampening consumer confidence. The impact of inflation with consumers facing real term pay cuts, the impact of increased energy costs and now surging mortgage costs on the back of a disastrous mini-budget, which the effects are unlikely to be reversed as quickly as they were created. 

A headache-inducing cocktail of challenges in this critical time for boosting the bottom line. Yet retailers have shown remarkable resilience and adaptability over the past two years to continue to offer customer-centric strategies. They will need these qualities to continue to survive and thrive. 

So how to react? In a recent study we carried out in conjunction with YouGov, we wanted to look at the impact of this inflationary period on consumer behaviour. What are the drivers of purchasing in these challenging times and what is the impact on cross category purchasing? By understanding the motivations of different consumers at this time retailers can ensure they truly focus on their needs. Those that do will be rewarded.

Consumers cutting spending on essential items

The research highlighted that the cost of living crisis is being felt at the sharpest edge by those on the lowest incomes. Many are struggling to afford the basics as energy bills have rocketed, despite the support package now being provided.

For essential household items, more than 2 in 5 respondents revealed they had reduced their spending (43%). Of these, 1 in 3 (32%) have cut spending on essential household items by more than 15%. 3% have cut spending on essential items by more than 50%.

There are some significant variations, based on gender, location, age and financial situation. 48% of women have reduced spending on household items, vs 38% of men. Of those who have reduced their essential household spending, home owners (of any type) are the most affected, with 63% saying they had cut spending by up to 15%, compared to 51% of renters.

Londoners are least likely to cut spending significantly. Of those who have reduced their spend on household essentials, just 2% of Londoners are cutting spending by more than 50%. Meanwhile in the East of England this rises to 6%, and 7% in the North West.

This highlights the uneven nature of the situation and the need to not have a one size fits all strategy in communicating with audiences.

Spending plummets on big ticket items

For considered purchases, 52% of 18-24 year olds have cut back on spending, compared to 68% of 25-34 year olds and three quarters (75%) of 35-44 year olds. The categories hit hardest by a cut back in spending of consumers of these goods are: Consumer electronics and homeware and home furnishings with 61% of consumers of these goods reducing spending. Next was Clothing & apparel 60%, DIY and garden, 50% and Baby and child, 41%. As the cost of living increases and the ability to secure a new mortgage or afford the one you already have will impact further the decision factors around a considered purchase.

The factors driving purchases in today’s climate

Of those factors we know that are driving purchasing behaviour for more expensive items. In today’s environment the number one factor driving a considered purchase is that something is within budget, 69%, durability/ being fit for purpose was next, 52%. Third in the list was sustainability, still favoured by 23% of respondents. Brand awareness was considered by just 13% of respondents. For Gen Z (18-24 year olds), the result for sustainability was far higher at 38%.

Millions of consumers looking to switch brands

Another key takeout is that brand loyalty has plummeted in the current climate. 60% of people would switch brands for essential items and 48% of people revealed they are more likely to switch non-essential considered purchase brands.

This suggests the need for a tailored approach for brands to remain relevant in the current environment. Ephemeral qualities like brand values seem less important when people are rightly concerned about affording bills.

Quality and price consideration crucial

The focus in generating sales and retaining customer interest should be price and durability as the two key factors driving buying decisions. People still need big ticket items but necessity trumps desire in the current environment.

However, it is important for brands to have expertly crafted messages for different audiences.  with sustainability still crucial, in particular for younger audiences. Having the right tone and audience-centric approach will help brands and retailers remain relevant and necessary during the next few months.The results reveal the cost of living crisis has had a dramatic impact on consumer spending at all levels. It highlights that there is a real need to focus on value and  longevity to win customer loyalty with the need to craft audience-specific messages like never before. If retailers and brands keep this in mind, without the need to apply offers, they can still thrive amongst the turbulence and uncertainty. 

To read the full article by Dan Todaro, Managing Director please visit Retail Sector

Photo by Rachel Hannah Photo on Unsplash

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The New Normal

Following a two year hiatus, IFA is back and re-energising the tech world’s attention. From smartphones and smart homes to TV, audio and domestic appliances, the show was packed with the newest and exciting products from some of our favourite brands including LG, Samsung, Toshiba, Miele and countless more.

IFA is one of the globe’s largest technology events, with a confirmed 1,100 exhibitors and 161,000 visitors this year. The show attracted a strong media presence; more than 2,500 journalists came to Berlin and around half of them were representing international media organisations. So far, media monitoring has identified coverage of IFA 2022 by publications and broadcasters in over 100 countries around the world.

This makes IFA a vital industry showcase for trade and consumers to see leading brands present their latest products and innovation to not only the press but also to retail buyers as well as the general public. Plus it provides observers on a world stage, through social media and chat, a window to the latest technology trends, discovering where brands are developing their product portfolios. Furthermore, it’s a barometer for retailers to see what’s coming, helping them prepare for range planning and the knowledge share required to sell these new products effectively in the coming seasons.

Having not had a full event since 2019, during this period it seems that many brands have been taking influence from how we now live our post pandemic lives. Therefore, following lockdowns and the ghosts of COVID, they are recognizing that we value our homes more than ever as places to thrive and grow, not merely live. Consideration is also being given to our lifestyle choices and the generational importance in sustainability as a concern in the technology we use day to day to enhance our lifestyles. This is being recognised more I suspect, to generational demands and less because brands wanted to. Nonetheless, it’s a positive step forward and one the technology industry can lead in and set examples for others.

Therefore the overriding message, which every brand was shouting about loudly, was sustainability both in terms of materials and product usage. I noted that less was being said about the ethics of manufacturing and how products are made. Perhaps this is a step too far to address across all category lifecycles. But even so, sustainability and design had become significant buzz words at IFA 2022.

The sustainability message carried into some of the stand designs, with Panasonic and the hall they occupied being very low cost, with a focus on reduced waste. This meant no floor covering and attention was focussed on the products rather than their IFA setting. Also of note, was the fact that some brands didn’t bother attending this year. Sony being one such brand whose only presence was a meeting booth.

Changing Consumer Styles

As indicated, brands have also been busy in their understanding that our homes have become increasingly more important as a style statement that reflects our changing lifestyles. This meant a host of new style focussed products and technology being brought to market and proudly showcased to the world at IFA2022.

One such brand to do this rather spectacularly was LG who brought us the new MoodUp fridge which is not only filled with advanced refrigeration features but also has personalisation at its core. Owners are able to change the colour of their fridge depending on their mood and light up their kitchen to reflect the desired ambiance. Furthermore, it incorporates speakers to play music thus providing an additional sonic experience.  With the ThinQ LG app on your mobile devices, you will be able to adjust the lighting from 22 colours on the upper panels and 29 colours on the lower panels. For those that don’t need this choice of combinations there are also 4 preset colour schemes. These presets also have the benefit of enabling the app to stream music playlists that compliments the selected colourway as well as syncing the light effects with the music so that the colours change with the music.

Sticking with home appliances, it appears that it’s no longer unusual to desire a range of products that are fully interactive. Some offer interactive panels, where, for example, you can pull-up recipes to assist with your cooking, Facetime a friend or simply use your appliance as a digital photo frame to display your snaps in an endless loop. Samsung presented such a solution with a bespoke range on MDA’s, which not only look fantastic but are also super efficient in their energy consumption and water usage.

The competition is also ahead of the curve. Again, LG have their own unique technology as demonstrated on their Instaview capable fridges, while Panasonic had its combination ovens which seem old fashioned but have been revitalised with new features in its SDA range alongside its bread makers and juicers. A clever move, reflecting the trend towards making things in the home to assist in budgeting and sustainability, as well as reducing the need for packaging and transport. These categories are seeing growth and Panasonic is very much ahead of the curve leading the charge here for premium brands.

It certainly appears that some lockdown habits are persisting, together with health and the increased cost of living being a driver for certain categories. I would suspect that breadmaking and juicing will continue to gain popularity across all generations. In fact Panasonic announced that their mission across all well-being categories, inner, outer and spatial well-being, is to deliver on their vision of holistic well-being.

Commercial Appeal

Another trend evident from many brands including Samsung, LG, Panasonic and TCL was developments in heating and cooling products. Aircon may not be a particularly glamorous category but in adding air purification technology and applying a variety of unpronounceable, ethereal names such as NanoeX or Breaver, manufacturers are trying to garner attention in this category but i feel these unpronounceable names are merely branding for branding sake, maybe detracting for the core of the product and its health benefits.

From branding to innovation and as mentioned, there’s no doubt that sustainability is the name of the game at IFA alongside intelligent connectivity of devices and Smart Home solutions and there was certainly lots to impress. Sometimes, however, I’m left with the impression that innovation can also be created only for the sake of it with no real commercial or mass appeal but merely to grab headlines. The LG Styler ShoeCase has to be for me the most random exercise in innovation from an established global brand. This thing is in essence, a box in which to display and sanitise your footwear, removing the odour of stinky feet. These cases are transparent on three sides, with customisable lights and a 360-degree turntable which refreshes shoes in 40 minutes with LG’s TrueSteam technology to reduce odours, viruses and bacteria. This is all very clever but the ThinQ app lets you go that one step further, in that you can upload the details of your most precious kicks to share on social media and brag about.. Mindblown? Mine is.

Taking this concept one step further still, you could place this box of wonders on the LG Aero Furniture table. Made from recycled materials, the LG Furniture range crosses home furnishings with technology. What is basically a lamp with mood lighting, buyers of the Aero table can choose a base and top to match their decor.

This approach was a trend across the board from Samsung with its ‘Bespoke’ range of home appliances which again enabled personalization of your appliances to match your living space and tastes. Taking the technology Samsung is known for and turning it into a statement piece many would like in their home. This naturally extended into some more traditional technology you expect to see at IFA such as the new Laser, 4K Triple and NEO QLED 8k televisions.

Toshiba also had some interesting tricks up their sleeve such as the new Toshiba Tik Tok TV to appeal to the generational shift familiar with the platform, bringing it to the biggest screen in your home with quantum dot 5k, Dolby Atmos and Onkyo speakers.

I suppose what we are seeing here from brands like LG and Toshiba is a way to tap into all generations and remain relevant whether that be through traditional technology as we know it and the new world, where technology intersects art and design to enhance and in some cases, create lifestyles. All done within the remit of sustainability and convenience for an ever changing and evolving population that now lives differently to how we did only two years ago. The paradigm was well and truly turned on, metaphorically and in reality.

In essence, I suppose the absence of this behamouth hosted in Berlin, has made us all grow fonder towards IFA, reminding us of  its importance in the industry, garnering more than 1.6 million impressions on all social media. This makes IFA the ideal platform for brands to showcase, with pride, their innovation which retailers will be ranging in the coming months. With the economy as it is, and home ownership becoming increasingly more prohibitive due to interest rates, some may revert once again to improving the space they currently live in. That’s where you fit in. Make the most of the opportunity and give your customers honest advice and sustainable solutions from the best technology that matches their needs.

To read the full article by Dan Todaro, Managing Director please visit ERT Online

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