Brands must support consumers during the cost-of-living crisis

Today, MediaCom and Creativepool are hosting a discussion on the impact of the cost of living on consumer and brand behaviour, as we explore how it is impacting consumer spending and expectations, and how brands can respond.

From rising energy bills and inflation, to growing fuel costs and food prices, the UK is facing its worst cost-of-living crisis in four decades, as the cost of everyday essentials such as groceries and bills rise faster than average household incomes.

And while the Covid-19 lockdown has left many consumers with a small buffer of savings, this crisis is already having a real impact on how they choose to spend their money with brands. UK retailers have reported a drop in sales as record-high inflation kept consumers from spending on discretionary products and services in June.

In fact, the British Retail Consortium (BRC) said households are reining in spending, with many either downgrading to cheaper brands or slashing items from their grocery lists altogether. What’s more, consumer confidence dropped to its lowest ever rating in July at 41 per cent.

In short, this crisis is having a real impact on both consumers and brands. Consequently, while consumers are bearing the brunt of the impact of the cost-of-living crisis, many are turning to brands for support.

Clear consequences

But what should brands be doing to help? The overwhelming majority (nine in 10) of consumers feel brands should play a role in helping them through the cost-of-living crisis, a sentiment felt strongly among 18- to 25-year-olds (92 per cent) who have been particularly hard hit by economic hardship over the past few years. The oldest demographic also widely supports this, with 83 per cent of respondents aged 68 to 77.

Consumers also want brands to focus on fair pricing and value for money more than support or extra service, with 48 per cent expecting brands to keep prices fair, and 30 per cent expecting brands to offer more value-for-money propositions

And if lowering prices is not an option, there are other ways brands can appeal to shoppers, with 42 per cent wanting brands to reward customer loyalty and 30 per cent expecting brands to be both honest, transparent and trustworthy, as well as helping their products to last longer.

But, most importantly, consumers do not want brands to sugar-coat the situation people find themselves in, with 58 per cent saying that advertising that pretends that the world is fun and everything is okay shows that a brand is out of touch with reality.

With this in mind, it’s clear that brands that fail to not only acknowledge, but act on, the cost-of-living crisis are going to face serious consumer backlash, whether in the form of reduced sales or damaged reputations.

The way to win hearts and minds

Another area that is set to be impacted by the cost-of-living crisis are events. While events this year will still be prioritised as people are keen to see loved ones and make up for lost time, most have admitted that they will be looking for ways to celebrate at home rather than in venues where they have to spend money. A significant 76 per cent of consumers are planning on celebrating events at home, allowing people to have more control and personalise their celebrations. Notably, 45 per cent are prepared to get creative when celebrating events, whether that’s staying home, decorating or making gifts themselves.

However, this is an opportunity for many brands. With the right balance of value, empathy and understanding of consumer priorities, any brand savvy enough can ensure they offer an evocative and empowering proposition, which drives further consumer interaction.

Just look at one of the brands already doing the most to help: Tesco. By allowing children to eat for free every day in its café across the summer holidays, it has won the hearts and minds of consumers, while showing an understanding of the pressures many families are under. This is just one of several initiatives by the supermarket to help shoppers spend less.

These actions, while small, are crucial to not only ensuring continued custom at a time when consumers have less to work with, but will create loyal customers for years to come.

Geoff de Burca is chief strategy officer and Katy Harkness is strategy director at MediaCom UK