Let’s begin with what we know.
Global research from Deloitte shows that consumers are now more “worried” than “not worried” about themselves and their families. This anxiety is primarily related to the current financial situation, their ability to pay the bills, buy food and other essentials and so on. Consumers react to this raised concern by cutting down on their discretionary spend – travels, entertainment, clothes, shoes – and are looking for cheaper products.
The question is how each consumer product brand respond to these data. What is the strategy to not only survive a recession but also come out stronger on the other side? I have a keyword and maybe a recipe for success to help answer that question.
Trust is a fragile asset
The keyword is trust. Trust is the foundation of any meaningful relationship, be it between people or organizations. Trust is built through actions that demonstrate a high degree of competence and right intent.
Today, the global energy crisis and the looming economic depression are challenging the very notion of trust between consumers and consumer brands. For instance, supply chain issues can result in stock-outs. Stock-outs break the inherent promise of reliable availability and hurt perceptions of competence. Labor shortages reduce production and, in some cases, can affect quality and service levels, further harming the perceived ability to competently deliver on promises. Rising prices that jump beyond what is seen as justified break the promise of a fair deal. Workers who don’t trust a company to create a sense of belonging are also unlikely to accept job offers or stay. Add to these more factors like shipping delays from online channels, accusations of “greenwashing,” a potential lack of personal engagement, or a general loss of trust in organizations, and it all amounts to an important moment to focus on trust in the industry. In fact, nine in 10 executives surveyed by Deloitte say the industry must work harder to retain trust.
Get in sync with consumers
The most common reaction to a crisis is to cut and slim down on all levels: Reduce operational costs, right-size the organization, streamline workflows and so on. While it can all be necessary to survive the coming months of turbulence and instability, participating in a race to the bottom is likely not going to help you to a stronger competitive position.
What if we turned this around? What if a crisis could be the source of reinforcing the trust in your company?
For a moment, try to think back on some of the major crises we have experienced. Take the SARS outbreak of 2003, The Great Recession in 2008 or the recent COVID-19 pandemic. Every time incidents like these happen, they change consumers and consumption patterns for good. What did we all do when shops closed during COVID, and we were stuck at home? We ordered online and received our products at home. Today, rapid delivery (as in UberEats, WOLT etc.) has skyrocketed as a business model with new companies promising faster delivery of products we have never received at home or on the go before. These shifts in consumer behavior began as reactions to a crisis but quickly turned out to be major opportunities for those who managed to get in sync with the new consumer trends.
Honor your core values
I believe that trust can have the same kind of transformational potential in the midst of an economic downturn where basic dynamics in society are being challenged. If you raise your prices too high, consumers will stop trusting you. If you compromise on product quality, customers will notice, and they will stop trusting the product. If you deviate from your targets on sustainability and environmental goals, your brand becomes untrustworthy.
Think of it in this way: In rough times it’s easy to make up excuses why you can’t deliver on your promises. Which is exactly why you must stay the course, honor your core values, and invest in trust. Use all the resources you can on initiatives that increase transparency, engage with customers in new ways, and support a purpose that transcends business goals like revenue and profit.