So you’re hearing a lot about how tough the coming months and potentially years are going to be.
For many reading this, that’s most likely what brought you here. Although we’re not under any illusion that every retailer is about to soar through to success at a time when the economy is not in the greatest of shapes, has anyone commented on the possibility of opportunities that come with a recession?
At a time like this, retailers have every right to worry about consumers and the obvious assumption that their shopping habits are going to scale back as a result of a cost of living crisis. But we’ve had recessions and economic downturns before, so for the retailers that made it out of the other side, or even the retailers that grew in a recession, how did they do it? Is it possible this time around?
There’s no one-size-fits-all approach here, let’s be honest. If that were the case, every business would be on its way to international domination. However, we do have some advice from our learnings of previous economically tough times because we’ve been here and done this before.
Let’s take a look at some advice we think should be at the top of your priority list.
Protect your market share
One of the best pieces of advice that we endorse when heading into a recession to ensure you get ahead of your competition is simple; protect your market share.
As the cost of living crisis grows, we could see consumers' overall spending decrease by around 25%. If you’re not selling essential products then most of that reduction could come from your share of their spending.
However, Harvard Business School has reported that most loyal customers aren’t deterred by a recession, and you will already have a customer base you can depend on that are frequent shoppers.
So whilst consumers may be spending less collectively, your most loyal customers are less likely to reduce their spending. Those loyal customers are seen as your market share.
Customer loyalty is going to be one of your lifelines throughout times like these. Finding ways to thank and reward customers for continuing to shop with your brand even though they too may be affected by these tough times is not only the right thing to do, but it can further nurture a lasting relationship.
Offering exclusivity on products, early access to sales, regular discounts or loyalty systems are a great way to not only reward your customers, but it shows you appreciate their consistency and care about them. This won’t go unnoticed.
Reinvigorating lapsed customers
In a tough economic slump, you should, of course, ensure you’re still providing an excellent service to those customers whose loyalties lie with you. This is a given. But where else can you secure additional revenue?
Simple, your lapsed customers, those that only purchased from you once or have stopped purchasing from you recently.
In a recent survey, we ran with YouGov, asking 2,000 consumers how the cost of living crisis is going to impact their spending habits, 74% of consumers said they would be more likely than before to purchase from a brand they had purchased from previously.
Therefore winning new customers for your brand is harder than it has ever been, which means re-engaging with those that have lapsed is a much more effective strategy.
If new customer acquisition is becoming more challenging and more costly, pivot your investment into retention and upsell activities. Create ‘lapsed customer’ incentives and offers, and inform them of your new products they may not be aware of.
Act fast
The greater the cost-of-living crisis has on consumers, the more retailers are going to look for ways to prepare and get ahead of their competition. Think about it, you’re here and you’ve made it this far, so you’re thinking about it too.
Ensuring you’re preparing to get ahead, the sooner the better, will increase your chances of actually getting ahead.
