Uncovering opportunity within the cost-of-living crisis
With energy bills, fuel costs, mortgage rates and the cost of the weekly shop all rising, inflation is soaring, and household budgets are stretched to levels unseen since the 1980s. A view echoed by the ONS, whose latest report into the cost of living found that 9 in 10 British consumers had noticed an increase in the cost of living over the preceding six months, while a quarter of households found it challenging to cover last month's bills.
History shows that transient, value-based buying decisions quickly replace brand loyalty whenever consumers tighten their belts. A situation already felt on the high street, with Tesco CEO Ken Murphy recently reporting falling basket sizes as consumers look to take control of their spending. Murphy observed people are trading down to private label and moving away from fresh in favour of frozen food - as the crisis continues to bite.
But however gloomy the outlook, brand owners shouldn't forget that opportunity is most frequently found in times of crisis. In fact, the list of brands that found success during a downturn is surprisingly long. From Airbnb and WhatsApp to Microsoft and Disney, many brands have thrived in recessionary times by listening to customers and offering them more of what they want and need.
What consumers want and need during the crisis
In May this year, an IPA poll cited the top five ways consumers want brands to support them through the crisis: Keep prices fair; freeze prices on value range; offer more value-for-money promotions; reward existing customers' loyalty; and increase the number of promotions they offer to consumers. Again, these are insights many brands are already acting upon.
Recognising these shifting attitudes, Asda is offering 'Kids eat for £1' in their cafés, McDonald's recently introduced the MyMcDonald's loyalty programme, whilst Iceland is inviting customers to join its Food Club, offering interest-free micro-loans (worth £25-£100) to members.
Winning customers in the downturn
However, looking beyond short-term, tactical promotions such as these, it is possible to unlock growth in a recession. This is precisely what we helped Ocado achieve when we launched the Fetch brand at the height of austerity and against a backdrop of a double-dip recession in 2011.
Uncovering a growing trend towards the humanisation of animals and treating pets as part of the family. Into this functionally led category, we launched Fetch, an emotionally charged brand that loved people's animals as much as they did. Promising pet owners the opportunity to become the 'perfect pet parent' - while accessing products previously only available through vets – the brand captured the imagination of consumers, adding over £350m to group revenue in its third year of trading.
Similarly, when developing the Lidl brand, we emotionally connected with consumers – elevating the brand identity visually and introducing a new cheeky tone of voice to reinforce the quality of its products and drive reappraisal of the brand. After all, just because a product represents excellent value doesn't mean it has to be presented as cheap - a strategy that encouraged even more UK consumers to add Lidl to their repertoire of grocery providers.
Seizing the opportunity
So, rather than fear the cost-of-living crisis, brands should embrace it. Take the time to listen to customers, evolve your brand, and introduce new value-added propositions that better meet customers' needs and desires. Seizing the opportunity to acquire new customers at a time when brand loyalty is diminished, and consumers are actively looking to make a change - now that's what we call a win-win strategy.
Read more about The Clearing's work on Full Time in Creative Review here.