Recession. For any business that has a transactional relationship with consumers, it is a scary word. And with coronavirus still placing significant restrictions on how brands & retailers service their customers, we are likely to see the economic impact of Covid-19 continue into 2021 and beyond. Indeed, the latest figures from the Institute of Fiscal Studies suggest that by the end of 2024 UK GDP will only be 1.9% above 2019 Q4 levels (4.7% below the 2016-19 trend).
At the same time, PWC shared the latest consumer confidence index figures at our last webinar and suggested that consumer confidence had returned to pre-lockdown levels and was significantly higher than during the 2008 Global Financial Crisis (GFC).
All of which leads to much uncertainty about how retail will fare in 2021. It is for these reasons that the theme of the next webinar in our Change is Now series is “How to Recession Proof Your Sales Plan”. The webinar will take place on Thursday 12th November and will feature 60 minutes of insights, opinions & tactics from leaders across UK retail on how best to combat the recession. How can you adjust to the changing needs of consumers? What lessons can be learnt from the GFC and other previous recessions? What are successful retailers doing to not only survive, but thrive in times of adversity?
To support the webinar and try to answer some of these questions, Summit have commissioned a survey to investigate how consumer attitudes towards spending have changed recently in relation to the pending recession. This was done with three key hypotheses in mind, and in the upcoming webinar we’ll reveal whether these hypotheses hold true:
1. Customers are too concerned with the short-term impact of lockdown restrictions to worry about the longer-term economic concerns
“When will we come out of lockdown?” “What’s the number of cases per 100,000 people in my area?” “Will my wedding/birthday party/holiday be cancelled?” “Can I spend Christmas with my parents?” These are some of the potential questions that people may want to answer before they even think about the state of UK GDP. With so much information about Covid-19 restrictions dominating the news and conversation across social media, is it possible that customers have not even begun to think about how a recession may impact their lives and adjusted their behaviour accordingly?
2. There is polarisation in the impact on different customer groups and retail verticals
Depending on which forecast you read, UK unemployment could peak at anything between 8% & 12% between Q4 2020 and Q1 2021, when the furlough scheme is wrapped up and some businesses continue to struggle. However, there are plenty of people fortunate to have seen no impact on their income and have actually been saving money on commuting & non-essential spending. Will we see stark differences in the behaviours of those whose livelihoods have been directly impacted by Covid-19 and those that are more fortunate? Similarly, in retail, revenues for different categories & verticals is polarised as consumer demand has shifted. Will this continue to be the case?
3. The recession represents an opportunity for those that are brave enough
Peter Field, one half of the duo behind the seminal marketing effectiveness study, The Long & The Short of It, wrote an article several months ago suggesting that during the last recession in 2008, brands that continued to invest in advertising were able to drive long-term growth aligned to Excess Share of Voice (ESOV).
Media costs should, in theory, be cheaper as some retailers pull back spend, so maintaining spend should lead to an increase in ESOV and subsequently market share growth. Couple this with many consumer habits being in flux and more likely to try new products & brands and the 50% increase in online retail revenues, could there be an opportunity for retailers to landgrab a new customer base?
We’ll be sharing the results from this analysis and more in our webinar and via a downloadable infographic at a later date. And further to the results of our own analysis, we also have three very special guest speakers lined up:
- Amit Agnihotri, Head of Analytics at eBay UK, will share insights on how they intend to retain customers gained during lockdown and how they’ve been supporting their community of small & medium sized business trading on their platform.
- Phil Twigg, Head of Acquisitions at M&M Direct, will talk about how they’ve tackled logistical challenges throughout the pandemic and been using social media to keep their customers engaged.
- Andrew Stoodley, Group Finance Director at Clarks, will be in conversation with Summit Managing Director, Ryan Thomas.