Whether a pandemic or a looming recession, brands will always face unpredictable external forces that impact consumer behavior. As experts continue to define our current economic situation, we as marketers can always look to past downturns to help formulate educated strategies that support brand-building regardless of the unknowns.
What we do know, as both marketers and shoppers, is that consumers tend to demonstrate at least three behaviors that brands should react to when faced with an economic downturn. So, let’s discuss an overview of each and how brands can make the most of an inevitable shift in behavior.
According to the recent McKinsey US Pulse Survey, the number one concern of respondents was rising prices and inflation over other economic, political, or personal issues. This concern frames how consumer behavior has shifted toward spending less overall. Shoppers are willing to change their traditional habits to save money, with the following three ways rising to the top:
#1 – Seeking Value Stores.
We can look back to the Great Recession of the 2000s to confirm that consumers tend to shift away from traditional grocery retailers to shop more discount and warehouse stores during an economic downturn. Most recently, we see this behavior repeating, with Walmart and Sam’s Club capturing value-seeking consumers from higher income brackets. Customers want to shop where they perceive they can get more value, which pushes them to find store alternatives.
#2 – Shifting to Discount or Private Label Brands.
With cost savings top of mind, it is no surprise that shoppers are looking for brands that deliver on both price and quality. Private labels have consistently grown in popularity with their perceived value; however, national brands seek innovation and promotions to guard their market share. Customer brand switching is top of mind for brands now, and finding solutions is a must when inflation is high.
#3 – Sticking to Lists.
Predictably, when recessions loom, shoppers become more thrifty. One way consumers manage their spend is through making shopping lists and sticking to them! Updated for the digital age, this tried and true method has become increasingly important to consumers in times of economic uncertainty. Shoppers build digital lists and use them again and again, yielding repeat purchases of items they believe have the most value. Getting on the list is vital for CPGs who want to avoid brand-switching.
If the CPG industry is genuinely recession-proof, as some consider it to be, it is certain to be tested by our current economic climate. However, given the inevitable shifts in consumer behavior driven by cost, CPGs can benefit by adopting a few of the following strategies:
Track the data. Brands must prioritize measuring real-time changes in their consumers’ spending habits and general sentiment. The data will help guide the right messaging strategy unique to your ideal audience.
Look for experienced advertising partners. We have to toot our own horn here; AdAdapted has helped CPGs meet their advertising goals throughout the current economic downturn as well as the uncertainty of the pandemic. Our first-party data, exclusive app network, and patented technology get brands on valuable mobile lists, driving resilient, BIG results. Unlike any other advertising platform, we combat consumer trade-down behavior and encourage repeat purchase and loyalty. We get brands on valuable mobile shopping lists, driving intent, and sales—a big win-win.
Go big! Research shows that companies that invest in targeted marketing efforts during economic downturns come out ahead of the rest when the dust settles. So use your data and partners’ expertise to select the most impactful channels working for your brand, and double down. Your leadership will thank you for your vision when your brand has weathered the storm (and thrived!)
To learn more about how AdAdapted leverages first-party data to support an omnichannel approach and get your product on the list and in the cart, email email@example.com!