Monthly Archives: December 2022

Adapting For The Peak Season & Beyond

The Festive period is here and every retailer is gearing up for a rather different Christmas than we may have considered normal, the Christmas cookie-cutter approach is no longer relevant and adapting to your local audience is critical to success. We are living in a time of significant disruption and reimagined stability, requiring an updated approach to brand communication in sync with our times, a more cost and sustainable time. Established brand value propositions built up over many years are increasingly becoming irrelevant in a world reeling from a pandemic, a nonsensical war in Europe, embedded inflation and a recent economic crisis. The retail environment we all knew as recently as 2019 is becoming more like a faded memory of a bygone era.

The question is do brands and retailers need to redefine their appeal to stay relevant to a shifting consumer appetite based primarily on economic and environmentally, socially relevant trends? Particularly when facing a predicted period of prolonged economic downturn throughout the world, making the most of this festive trading period is essential in order to capitalise on the nation’s consumers’ appetite to shop either for themselves or as gifting.

A New Paradigm

Due to the change in how we lived that we experienced recently, the legacy lives on and our needs have been radically redefined. The pandemic’s cultural legacy has been a shift to a life where many of us are at home more and need products and services that cater to a new stay-at-home existence.

Meanwhile, the aftershocks of the pandemic and political instability and market fluctuations have caused enormous inflationary pressures impacting many. This has created a new economic reality where affordability trumps desirability in the purchasing behaviour of millions. Including those who perhaps considered themselves more ‘well off’.

The climate crisis is also front of mind and certainly hasn’t dissipated despite the more immediate worries. Events like COP 27 educate us to do more by increasing awareness and encouraging changes in living habits.

For every retailer, a new brand playbook is needed for this new age. Our understanding of consumer behaviours is understood better through research. A recent study we conducted with YouGov pointed to five key motivating factors driving consumers’ intent to purchase. These may assist to ring in the cheer for your store during this ‘peak’ period.

1) Affordability

In a survey of 2,000 consumers, we asked people what were the key drivers that would persuade them to make a considered purchase? The number one reason, perhaps unsurprisingly, was that it was within their budget. I recently spoke at the ERT Turning Point conference alongside AMDEA, the body that represents the white goods industry in the UK who did some research in relation to the Eco buttons on washing machines and dishwashers etc.

They revealed it was saving consumers on average £90 a year. They now really highlight this facet to drive consumers in-store to purchase their members’ products. Knowing that affordability is a critical criteria for consumers, brands can smartly promote the long-term savings they can offer. Perhaps paying back the cost of the appliance within five years. When you multiply these savings across several appliances in the home, you can see how the savings increase.

Furthermore, the energy-saving ‘eco’ modes can provide a win/ win of appealing to sustainability-minded consumers, particularly Gen Z, who also want to save money and the planet, as we all should be focussed on. Retailers can also benefit by highlighting appliances with these features as part of their promotional marketing as more and more consumers are having to rely on eco settings to reduce energy bills.

2) Essential Trumps Desirable

For 73% of consumers in our survey, the idea that a product was ‘essential’ was a key reason they would consider a considered purchase. Therefore positioning your products ranged as ‘essential’ items in the psyche of your target audience is important as part of the marketing mix.

Perhaps the days of assuming there is an implied need for the categories are no longer relevant due to changing consumer lifestyle and habits. Disposable income in all households, even middle earners, is becoming more scarce. They may want a product. That desire may be there. They may covet it. They may feel that they need it, but unless it’s absolutely essential and integral to their life, they are not going to buy it. At least not just yet maybe, unless you can convince them otherwise. Think about how you do this.

The lesson is therefore highlighting why your ranges are ‘essential’ to their needs. It is not so much that it may be that there’s an offer but more, how do they add genuine value to their lives? Why is it potentially going to be a product they can’t live without? Tapping into the primal needs of the user in these turbulent times is a way a retailer can craft their story and resonate honestly with their target audience.

3) Durability

As an extension to being essential, people will need to feel that the item that they are buying from your store is built to last for more than the lifespan of your average reality star.

Rather than offering a lifestyle associated with a brand, as retailers, you can focus on the quality of the products you are selling them. This should be the starting place for a conversation about a brand and how it will last for someone whose budget is going to be squeezed for some time. The hardiness of your product, particularly for those more expensive items you may range, is crucial. No one likes being mis-sold an item but people are far less willing to tolerate buyer’s remorse in a recession. Dob this at your peril, as it’s likely that you’ll never see that customer again

Consumers are also now genuinely asking, why do I have to pay more for quality? Surely, even if I’m buying at the entry-level of the range, it should still be a quality product. The craftsmanship of its build and robustness need to be communicated to the customer clearly and honestly by your staff to all without bias. 

Indeed we are now in a new reality where brands have to accept quality and durability is delivered at a more affordable price point. Certainly, if they want to maintain market share. Losing market share in a downturn can be very difficult to recover from when times return to being good. Long-term thinking needs to trump short-termism. This changes the way in which you sell to your customers of all demographics.

4) Sustainability

The longer something lasts, of course, the more sustainable it is. Sustainability is a huge driver for younger generations. In our research sustainability came through as a top driver of behaviour for 23% across all age groups and rising significantly to 38% for Gen Z. 

Far from moving away from this priority at a cash-strapped time, consumers are in fact doubling down. Indeed new research from SAP reveals that despite the cost of living, over half (52%) of UK consumers aged 18-34 are actively looking to shop more from retailers with strong sustainability credentials this Christmas.

They want to understand that a product is not destroying the planet. This is not greenwashing but also understanding this generation will do their research about the full life cycle of a product. The good news is the extent to which communication forms part of the sales process enables these factors to be included in the discussion. If something can save money by assisting less energy use or being more durable, it is therefore more sustainable and solves many current consumer concerns.

5) Innovation

Finally, innovation is the other key driver of consumer purchasing behaviour in the current climate. Indeed innovation plus value has also been a winning facet of the trend for air fryers. Indeed according to research by price comparison website PriceRunner, demand has soared by 3,000 per cent since 2021. This an opportunity to be understood and embraced to appeal to your consumers this gifting season.

However, critically the air fryer answers several other current consumer needs states. We, post-covid are eating at home more and it is a way of getting your family and your friends and getting your kids involved. It is also healthier. This addresses the growing trend for healthier versions of popular meals.

Most crucial to the surging trend though is the value proposition. The money that can be saved through cooking at a time of rising energy costs is significant and of course energy efficient. This is why we can be sure that this may be one of the most popular Christmas gifts this year as already on Black Friday it became a sell-out line in numerous brick-and-mortar stores and online with Curry’s stating they sold more than 18,000 during the week of Black Friday.

In summary, retailers do need to recognise changed behaviour and a new paradigm on the back of a series of interconnected trends and crises. These centre on changed lifestyles that are more based in the home, a growing movement for sustainability and most crucially the need to save money.

Consumers simply won’t invest in the way they did before, meaning retailers need a laser-like focus on their customers’ new needs. The narrative a retailer needs to highlight is value for money, why it’s essential, the product’s durability, sustainability and its innovation.

To remain relevant as we face an economically challenging climate is tough.  For some, this will require a radical step change. For others, it’s underway and the new normal.

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

Photo by Carl Raw on Unsplash

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Adapt And Thrive: How Retailers Can Succeed in 2023

The cost of living crisis era has shaped much of this year and looks set to be a trending topic well into next year. While we would all like to see the worst of it behind us, the latest OBR forecasts show that economic recovery is still some time away, with their data predicting a 7% decrease in household incomes in the coming two years. Read on to see how retailers can succeed in 2023.

A recent survey conducted of 2,165 respondents by the Gekko group and carried out by YouGov highlighted just how much spend has already been restricted in certain categories. It identified that 66% of those surveyed said that they are cutting down on non-essential items. 43% were decreasing spend on their essential household goods.

While these headlines confirm the severity of the situation the country finds itself in, within the retail sector the way consumer behaviour has changed as a result still presents opportunities for brands and retailers to succeed.

Gen Z Least Likely to Cut Spending

Interestingly 52% of 18-24-year-olds in our survey said they were decreasing their spend on non-essential purchases, the lowest of all age groups. Gen Z are brand focused and remain loyal to those that match their values in ethics and sustainability. Employed and with new money in the bank, this tech-enabled generation is just as willing to engage with brands both in-store and online.

At the other end of the spectrum, as we get to the older categories, there are further cutbacks with 75% of 35-44 saying that had reduced non-essential purchases. Of course, these older generations are likely to have more disposable income with which to keep up their levels of spend. Often being homeowners, these customers are the most likely to be purchasing big ticket electronics items like appliances, and therefore are particularly discerning about the quality and durability of these products.

Regardless of your target group, it is important to remember that there are valuable inroads to sales across the generations. A customised approach is required to provide a meaningful connection, translating through the customer journey to purchases.

Recession-Proof Premium Market

Much focus has been on consumers trading down for their purchases, but data also shows that the premium market has also been relatively recession-proof for a number of reasons. Premium customers are more likely to have kept purchasing regardless, being less affected by cost of living growth. Meanwhile other groups are also likely to invest in high quality devices as they are built to last, crucial with the cost of living squeeze likely to last.

According to Counterpoint Research, there was a 95% YoY growth in smartphone sales over $1000 in Q2, highlighting the ongoing demand for the very best devices. With their ranges coming into focus across all demographics, Premium bands can capitalise on this interest by offering accessible routes to their products through pricing plans and brand marketing.

Trading up and down for items is one way that consumers are switching products or brands, but there are others to look out for. We found that 48% of respondents were willing to switch for non-essential purchases as a result of the impact of the cost of living crisis. Within the electronics sector, budget (69%) and durability (52%) were key motivators to switch, with sustainability (23%) the third most important driving factor. The sustainability topic is not one that is going to fade away and is a particularly important one for younger Gen Z customers, who will connect better with brands that show ethical credentials.

So how can retailers and brands continue to succeed in this turbulent period? The ongoing lessons learned from the events of the past two years remain relevant.

1. Remain Adaptable

Showing adaptability when it comes to your consumers’ needs is imperative. Be prepared to pivot your messaging based on their needs now will pay dividends. This will stand you in good stead to succeed when the economy and consumer confidence begins heading in the right direction.

2. Continue to Invest In Your Brand

Building loyalty now will pay off in the long run, and investment in your brand during challenging times will pay off later with others disappearing from view. Discerning customers are looking for the best products at the best deal, therefore brands need to reinforce just why they should choose them.

3. Demonstrate Your Brand Values

Shouting about the values of your brand is also vital. We have seen evidence that consumers across demographics will stay loyal to those that they feel an affinity with, so to do that they need to know who you are and what you stand for. This can be through marketing activities in-store, online or across all channels simultaneously.

A recent LinkedIn survey highlighted that 78% of respondents agreed brands that maintain or increase their marketing spend during economic troubles are the best placed to recover faster afterwards.

4. Show Empathy With Your Audience

Demonstrating empathy in your go to market strategy during this cost of living crisis will ensure you remain relevant with all consumers when competition for attention is at its fiercest.

A positive omni-channel customer journey will lead to better engagement and enjoyment for the consumer. After all, a bit of joy goes a long way in these challenging times.

To read the full article by Tom Harwood, Data and Insight Manager please visit Talk Retail
Photo by Michal Matlon on Unsplash

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Predictions 2023: Marketing

Predictions are never easy, and as we end 2022 mired in a heady mix of cost-of-living crises, rampant inflation and a war in Ukraine, who knows what will be on the cards for next year?

In our first look at business predictions for 2023, we’ve canvassed the leading lights of the marketing world to gauge what they see as the key priorities for the sector in the year ahead. 

Having emerged from the global pandemic in 2022, we should remember that we’re all survivors.

Perhaps it’s no surprise, then, that kindness, empathy and being authentic are coming to the fore as we prepare to head into a new year… 

Dan Todaro had this to say:

“Inevitably next year will be dominated by the need for brands to understand a campaign’s Return on Investment (ROI).

“With so much pressure on the bottom line, ROI will become the single most important driver for marketing in 2023.

“After all, the ability to demonstrate the value of every pound spent and the weighted impact of your marketing efforts, leads to the only barometer that matters, sales.

“And in a period where 60% of consumers are prepared to switch brands based on value, the customer journey must be re-understood to be curated effectively”.

To read the full article featuring Dan Todaro, Managing Director’s insight please visit MediaShotz
Photo by Mediashotz

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