Recent figures from the federal government indicated that March retail sales were the lowest ever recorded, and the number of unemployed Americans is approaching 20 million. In March, the unemployment rate was 10%, higher than the worst month during the Great Recession that lasted from December 2007 and June 2009.
While no recession has been officially declared, some economists are forecasting its arrival. The picture is even more clouded because of the current pandemic. What does this mean for brands and consumers?
As brands struggle to determine how and where to focus their budgets and marketing efforts, consumers are in a quandary over where to spend what remaining resources they have because of insecurity about the future. For many, the stimulus checks will help pay rents and buy food and other staples for the time being. But there’s a lot of uncertainty looking ahead as reflected in the March sales report.
Consumer spending makes up two-thirds of America’s gross domestic product (GDP) and what’s being forecast by many economists is a continuation of a decrease in sales coupled by contractions in the stock market. Some are even suggesting that if a recession occurs, it could last longer than most because of the pandemic.
Action Items to Consider
Many brands have already cut budgets as a result of the pandemic. In any case, it would be prudent for companies to reassess their budgets and product lines and determine where their priorities are. Can low-selling products be suspended so that a reduced marketing budget might focus on the popular items?
By achieving the above, even with a reduced budget they can focus their efforts and funds where they count the most and increase their share of voice (SOV). In past recessions, brands that were successful in doing this emerged with a greater share of the market.
Gathering, analyzing and tailoring consumer data is important. Targeting messages to audiences for products that interest them and at days and times they favor can be extremely vital.
History has also shown that discounts are more effective in a rough economy than promotions that make consumers send in a coupon or wait for satisfaction.
Consumer trust is ever so important during these times. Messages that display empathy and bolster the consumer’s emotional connect with the brand are especially important and effective.
When It’s Over
By some accounts, a recession hasn’t yet begun. However, if and when it does and before it ends. CMOs must be prepared to immediately jump forward. History has also shown that after a recession, many consumers resume their normal behavior within a year or two and are ready to try new products.
However, some analysts believe that this pandemic will have added to the conundrum and cause many consumers to be more cautious. Some are even suggesting that it could take a decade for them to resume their normal buying habits.
Here is where frequent and constant contact with consumers is critical. Brands that listen and monitor their customers in person, via comments and suggestions on their website, and even through their customer success centers can gain invaluable data to plan ahead.