With inflation and the looming recession, how can brands and retailers sustain growth?
Digital spending has increased significantly during the first two years of the pandemic. US consumers alone spent $1.7 trillion online, according to Adobe. However, with inflation and the looming recession, how can brands and retailers sustain growth? Prompt, decisive actions are crucial while considering the following changes and insights into shopping behaviors.
1. Shoppers Expect Savings With Speed and Convenience
Amid the development of new touchpoints, customers are shifting not only spending patterns, but also expectations, with 42% seeking promotions, 32% trading down for lower-priced items and 26% resorting to private labels, according to Ipsos research.
Even when consumers are prioritizing necessities and savings, it doesn’t mean that they no longer expect convenience and speed. In fact, Deloitte found that convenience slightly edges out cost as the most important factor in consumer decision-making. So, your brand must be on top of its game in terms of delivering shopping experiences that are user-friendly, frictionless and valuable.
Related Article: How Does the Physical Customer Experience Impact the Digital CX?
2. Inflation, Supply Chain Issues Equal More Creative Consumers
Another impact of the recent difficult economic realities is the emergence of creativity among shoppers. To get the most value, they’re more open to trade-offs, delaying purchases and canceling orders. For instance, more than half of shoppers say they would consider plant-based foods over pricier meat, and others said they will forgo preferred brands.
Shoppers will also research more and use technology to maximize purchases. According to Gartner, 30% are using price comparison and coupon tracking tools. They’re willing to switch between channels to find what they want.
As shoppers become more eager to try out new tools and products to save, you have to keep track of what they’re looking for and provide it right away. To take it a step further, you should highlight the value that they’re getting throughout the customer journey with intuitive on- and off-site experiences that reflect your shoppers’ engagements with your brand.
3. Remote and Hybrid Work Continue to Shape Demand
A related trend to current inflation and the threat of recession is the normalcy of remote work. Today, employees opt to stay at home because the costs of going to the office have risen faster than their salaries. This is another segment that you should keep in mind. Remote workers plan to increase grocery and home spending and are less likely to spend on apparel, vacations and vehicles. Moreover, remote workers also support local brands.
Whether your brand is relevant for remote and hybrid workers or not, the bottom line is having the tools to understand your shoppers and curate the customer journey based on their unique needs and preferences. For example, when it comes to ads, you won’t be deploying mass promotions that drain your budget. Instead, you can adopt a more cost-effective approach that only shows the most appropriate ads to shoppers based on their real-time intent.
Related Article: 5 Ways to Lower Shopper Hesitations in Ecommerce Customer Journey
4. New Ecommerce Tech Shapes How Consumers Shop
In 2022, a Deloitte survey revealed that 67% of retail executives cited ecommerce and online shopping platforms as top investment areas. At a time when inflation is limiting consumer spending power, you can take advantage of next-generation ecommerce tools to deal with the impact of increased competition and shifting consumer loyalties.
From offline to ecommerce, and beyond, there are touchpoints and technologies that more and more customers are interested in using such as voice and visual search, as well as augmented and virtual reality. According to Accenture, 39% of shoppers have had a consultation in a AR/VR environment, while 19% of customers who have used VR did so to purchase luxury goods, according to a PWC survey.
The key to keeping up with your shoppers’ changing habits is optimizing these new types of technologies for seamless shopping. The interactions that your customers get wherever and however they choose to engage with your brand should be part of a cohesive and consistent shopping experience that makes your brand stand out and memorable.
5. Social Awareness and Activism Influence Shoppers
Finally, environmental, social and governance (ESG) concerns are becoming an integral consideration in retail. Customers are aligning themselves with brands that make a stand. ESG issues influence more than half of the consumers. Millennials and Gen Z are more likely to factor them while shopping, together with affordability, according to an Ernst & Young report.
It’s important to note that focusing on ESG can feed inflation and hurt growth because you tend to produce less and compensate with higher prices. While it’s a long-term play, you can offset this with “corporate karma.” Acting morally and ethically can generate and provide value that’s more long-lasting as “being good is good business.”
How Brands and Retailers Can Keep Up
It’s been challenging for brands and retailers. Just as COVID-19 restrictions started easing up, inflation, supply chain issues, and resource scarcity have affected consumer spending. As you navigate uncertainty, it’s crucial to not only remain agile, focused, and innovative, but to also put customers at the center.
Make keeping up with changing consumer habits and creating integrated customer journeys that are relevant and valuable to your shoppers’ current realities your north star. If your brand is seen by customers as consistent and reliable, you will be best placed to withstand economic challenges. The familiarity and connection this creates can fuel better lifetime value and strike the balance between short and long-term interests.