Are luxury items being redefined in the cost-of-living crisis? By Robin Shek, of Brave Spark.
What counts as a ‘luxury item’ to you and your customers? Champagne and caviar? Premium versions of cupboard staples like posh chocolate, grass-fed meat and locally-sourced vegetables? Or, perhaps, just the brands we’ve always known and loved, the price of which seems to have hiked exponentially over the past few months, rendering them more of a treat than they used to be.
We’re in the thick of the current economic crisis now, and people might be starting to re-evaluate what constitutes luxury. While ‘everyday luxuries’ might have been a fairly accessible concept in the past, the downturn will force many out of this bracket. And now, with the recent revelation that the cost-of-living crisis could turn out to be twice as catastrophic as initially expected, many consumers are going to continue to feel the squeeze – and to have to make concessions in their daily lives as a consequence.
This causes a raft of potential issues for brands. It might mean having to drive up prices in order to maintain profit margins and commercial viability (and the difficulty in managing the optics attached to that), or it might be that brands find themselves occupying a new ‘luxury’ space with which they’re not familiar.
So how can brands strike the balance between commerciality and compassion? After all, we have experienced recessions before, and economic downturns will certainly happen in the future, too. Marketing FMCG products in a recession can be navigated by brands sensitively focusing on affordability, and effectively communicating to consumers how the product offers value for money.
Effective communication can be undertaken in a number of ways. Brands should explore new ways of reaching their customers which can both be cost-effective and less imposing for consumers, like digital billboards and maximising use of digital channels. Keeping your existing customer base engaged and informed in difficult times will ensure they’re still your customers when we come out the other side.
But the new financial and social climate isn’t the only thing that FMCG brands need to consider in 2023. Whilst trying to mitigate the impact of the cost-of-living crisis, brands can’t afford to take their foot off the brake on environmental aspirations either.
Trying to perfect your brand messaging whilst considering all these factors might feel like spinning plates, but the best way to achieve balance is to be as open and transparent about your business as possible. That means communicating to your consumer any social or environmental credentials you have in place and always staying true to your values. At a time when cut through is more difficult than ever for brands, showing compassion is crucial.
Brands need to consider not just how they’re coming off to the consumer, but how they manage their own money during difficult times. When budget holders need to make cuts, advertising and marketing spend is often one of the first things on the chopping block. But historically, brands that are bold enough (and able!) to spend on their marketing during a recession tend to maintain their market share and attract new customers.
Essentially, if you are concerned about the optics of your brand in the current climate, it pays to stick to your guns. Stay true to your brand values and communicate them to existing and prospective customers; push on with existing marketing plans are much as you can; and work carefully on your messaging to consider the changing circumstances of your customers and your potential new place in the market. It is definitely possible for brands to weather this storm and navigate the way in which necessity is becoming the new luxury.