Not to add to your doom-scrolling, but all signs are pointing to a looming recession in the U.S. Though we may have put the pandemic slump behind us, it looks like we traded it in for another challenge. Businesses that have been strategizing for the ‘new normal’ for the past couple of years might have to pivot again as consumer behavior goes through another shift. We need to relearn what factors will influence their behavior in the coming months. Retailers on the front lines of the vagaries of consumer spending have to be especially responsive and prepared.
The good news is that you can still take preemptive measures to soften the blow. In fact, for savvy strategists, an economic downturn could also bring new opportunities.
Here are 5 ways retailers can prepare themselves:
Understand Customer Behavior
An obvious one: when consumers feel uncertain and have less to spend, they will turn to their go-to brands with whom they feel they have a relationship. And relationships are built on mutual understanding. Getting to know your customers better and faster can be the single biggest game-changer for retail businesses. With insights from customer behavior data, retailers can stay ahead of evolving trends and changing spending patterns. For example, Near’s recent retail study uncovered that over 51% of in-store retail shoppers preferred self-checkout mechanisms over the traditional check-out experience. Keeping a pulse on these types of preferences and responding to them is even more critical in lean times.
Don’t Stop Marketing
It is natural to immediately look at reducing spending during a recession. Instead of slashing your marketing budget, optimize it to perform better. Reactionary, short-term cost-cutting may lead to long-term losses when the market improves and your brand recall has suffered. Ensure your online and offline presence remains strong, and look to improve loyalty programs with insights into customer needs and wants. Direct your focus to improve the omnichannel customer journey and stay on top of your online and offline attribution game by identifying and optimizing the touchpoints that lead to sales. Finally, don’t turn the spigot off in influencer marketing, particularly in categories such as fashion, beauty, and home decor. It can offset concerns about ad performance because, in good times and bad, people still follow their favorite creators.
Invest in Data
Invest in Tech
Build Deeper Customer Relationships
This is the time to shift more focus to existing customers rather than aggressively going after new ones. Near’s study reported that a whopping 63% of shoppers reported a preference for a brand if they were part of that brand’s loyalty program. Developing direct relationships with customers has never been more important as consumers have more buying channels than ever and are constantly bombarded with advertisements and promotions from share-of-wallet competitors. Retailers like Starbucks for example have developed a data-backed loyalty program that uses an app to assign points or in this case, ‘stars’. By enabling easy payments through the app, Starbucks also gets access to a goldmine of data on their customer’s preferences while making it easy for customers to keep track of and redeem their loyalty points.
Despite predictions of tough times ahead, being proactive and taking measures to understand evolving consumer preferences and behaviors provides an opportunity for retailers to attract new customers while increasing brand loyalty. There has never been a better time to turn to data to inform your strategies for the coming year.
For a more detailed look at how to create an effective retail strategy to combat the recession, check out Near’s Retail Report here.