Consumer confidence in Britain fell to levels last seen at the depths of the covid-19 pandemic this month, a survey showed on Friday. Faced with inflation ramping up, higher interest rates and the potential repercussions of war in Ukraine, people are watching their finances with concern.
The GfK Consumer Confidence Index dropped for the fourth month in a row to -31 from -26 in February - its lowest since November 2020. Seeing as readings of -30 and below have presaged recession on four out of five occasions since the survey started in 1974, this is a figure brands would be advised to take note of.Gauging personal finances for the coming year, the survey also turned up a joint record low, matched only by July 2008, during the last global financial crisis.
All of this comes despite UK chancellor Rishi Sunak declaring in his spring statement last week that he would “stand by” households by launching an immediate cut in fuel duty and raising the threshold at which workers begin to pay national insurance contributions.
With the cost of living crisis biting harder each month, LBB’s Alex Reeves turned to ad agency leaders to find out how they would advise brands to respond.
Global marketing director, Wunderman Thompson
February and March saw consumer spending drop to the lowest levels since January 2021 – the impact of rising living prices has shaken consumer confidence and offset the reopening of physical experiences.
In this post-covid era, brands need to find a way to meet consumer expectations and stand out in the sea of online content, with data showing that consumers are willing to spend 20% more
for a personalised experience. By creating an optimised multi channel journey, brands can better understand how their customers behave online and enhance engagement through meaningful and unforgettable transactions. By modernising and personalising the end-to-end customer journey, brands can measure their site and app performance and accessibility to ensure that customers can fully engage with the brand online.
However, the plethora of different platforms available can create a fragmented customer journey. It is important for brands to connect the dots and create a complete view of the consumer – regardless of the device – to create a seamless experience. Our data tells us that 59% of consumers wish that brands and retailers communicated seamlessly across channels
. This kind of ‘experience-as-a-service’ (EaaS) approach – one that puts data and technology at the heart of meaningful experiences – will set brands apart from their competitors.
Chief strategy officer, M&C Saatchi London
There are only so many times we can talk about frying pans and fires. But this does seem to be a new low. Even [British ‘money saving expert’] Martin Lewis says there’s not much more he can do in the face of inflation.
It is unsurprising to learn that consumer confidence is low in the face of seemingly ever increasing petrol prices, food and goods inflation, and a generally bleak picture in which we hear that people who use food banks are rejecting root vegetables because they cannot afford to cook them.
This is a toughie for brands. You have to prove your relevance and role in peoples’ lives more than ever. Don’t waste their time. Don’t waste their money. If they buy you, be worth it. An economic landscape such as this one is a day of reckoning for brands.
UK CEO, VMLY&R
Against a backdrop of economic disruption and geopolitical uncertainty, consumers and brands alike feel the squeeze. As costs are passed onto consumers, deeply affecting spending, brands are once again left searching for new growth areas. But what may seem like yet another period of turmoil is another opportunity for long-term transformation.
This year and next, businesses will live and die based on how much they are willing to evolve. More than ever before, companies must show up differently in people's lives to gain new customers, open new moments and unlock new routes to market, which don't all involve traditional media or multi-stage retail.
Businesses will need to make all shopping moments a brand moment and all brand moments a shopping moment - which is only possible through a strong and equal combination of brand experience, customer experience and commerce. Through the seamless integration of all three, brands will be able to connect deeply with existing and new customers and add value in the moments that matter most.
Chief customer officer, AMV BBDO
With trust in government so low (not helped by the Spring statement) it seemed like businesses might have been able to fill some of the trust vacuum by doing the right thing during the pandemic - for individuals and the local communities they serve.
After building up so much goodwill, though, it seems that trust in businesses is taking another battering due to the cost-of-living crisis.
Businesses build trust on honesty, transparency, and consistency, but trust isn’t distributed evenly.
76% of consumers trust small businesses more than large ones.
There’s an inverse relationship between the size of a business and trust it engenders. It seems the bigger an organisation is, the more it is perceived to act in its own best interests. Short-term profit the prime directive.
It’s perfectly possible that many businesses are taking their fair share of the financial burden by not passing on all the price hikes to their customers. If they’re sizeable, though, they aren’t given the benefit of the doubt.
During this cost-of-living crisis they need to be more transparent than ever. They want to build trust, but they’re not giving trust to customers by sharing with them the full set of information and letting them vote with their wallets.
Head of strategy, London, Havas CX helia
At Havas, we believe in making a meaningful difference to the brands, businesses and lives of the people we work with. Yes, this means understanding how our clients make money, and how we make them more money. But it also means seeing the human being behind the customer data, and at the end of every transaction.
It means being empathetic to what’s going on in customers’ lives. Worry about their personal financial situation, horror at the war in Ukraine, rising Covid numbers will all impact customer behaviour. It means not overstating our role in customers’ lives. It means showing up in an appropriate way. We need to get honest about what customers want and need (sometimes this is uncomfortable, and not always what we want to hear). How can we be genuinely useful in our customers’ lives? How can we deliver meaningful value?
Spoiler alert: this may not be about selling more product. It may be the way we help Compare the Market customers’ already stretched household budgets stretch further. The way we provide Avast customers with a greater sense of safety and security online. The way we recognise and reward Pets at Home customers’ existing, everyday spend, delivering value not just to the individual customers, but also to the wider community.
If we do the right thing by our customers today, commercial success will follow.
Chief strategy officer, FCB Inferno
History has shown us that in times of recession and austerity, people crave reassurance, a sense of security and the pep of small indulgences. As we find ourselves in unquestionably troubling times and face huge uncertainties, it’s understandable that many brands, particularly those selling large ticket items will pull back. But you only have to look at the Grocer’s recent report on Britain’s Biggest Brands
to see a growing appetite towards comfort. There’s a lot to be learned from a list dominated by chocolatiers, bakers, soda makers and purveyors of affordable luxury. Till data doesn’t lie. Brands can play a small, but powerful role in offering some much needed comfort and spreading a little love.
Founder and chief strategy officer, Wonderhood Studios
With the UK set for the biggest fall in living standards since records began in the ‘50s and 1.3 million more people expected to be pushed into poverty, this is a crisis that will hit everyone. What consumers need from brands isn’t empathy or words of understanding. Brands should be considering what meaningful actions they can take to make a difference rather than simply crafting words to show they understand.
Asda is a brilliant recent example of this. They should be applauded for responding to Jack Monroe’s campaign
to bring back a full range of smart price products. But imagine how much more powerful it would have been if Asda had been the campaigner rallying the other supermarkets to action.
In terms of getting the tone right, perhaps we should think beyond playing the mood of the nation back to consumers in a bid to show empathy. The brief our TV colleagues are getting from broadcasters might be an interesting steer for us as marketeers to consider. The nation’s broadcasters are looking for content to ‘spark joy’. As the nation shoulders this additional burden, we would do well to remember our duty as entertainers.
Chief strategy officer, The&Partnership
The rocky road for our industry continues against the tough backdrop of a crisis in consumer confidence. The timeless conundrum persists however: how do we balance reflecting increasingly pessimistic consumer sentiment but also play a role in lifting it? It’s what British advertising has always done best: entertain to drive persuasion.
The cost of living crisis is forcing people to weigh up spending choices more than ever and we’re working with our retail clients to make consumers’ difficult decisions slightly easier. How can our brands offer real value? Inevitably through price, but also through service and experience. The leapfrog in digital transformation during the pandemic has rocketed online customer experience, giving brands the chance to make consumers feel truly recognised, understood and catered for. A race for the bottom on price will ultimately diminish long-term value for brands. More than ever then, we need to use the best of our head and heart. Blending the right data with good instincts to inform marketing decisions and serve meaningful, targeted content to insulate brands against spending headwinds.
This is no time for the old party lines between media and creative. Life is more challenging than ever so the response from our industry must lie in working hand in hand to help the brands we serve connect emotionally, not just economically across the whole customer experience.
Group strategy director, McCann Manchester
We’ve been hearing ‘inflation is coming’ for nearly a year now, but while that was seen as temporary on ‘hard to get’ items like cars, property, baking goods and anything staycation related, it’s now become all too real. People believe the evidence of their own eyes more than chatter and the prices of everyday items have been going up, with grocery for instance seeing average rise of 4.3% in February, according to Kantar. The spiralling cost of gas, car fuel and food are very hard to avoid, reducing people’s disposable income, so ordinary families have little choice but to cut their discretionary spending. Remember Britain is a nation increasingly reliant on credit with card debt alone accounting for over £56 billion, while mortgage debt reached £1,765.6 billion by the end of December 2021, so the spectre of rising interest rates creates another uncontrollable factor impacting our everyday lives.
Research by McCann Worldgroup UK and Truth Central suggests the current economy has pushed an already nervous population into an unprecedented level of uncertainty
. Fears over jobs security, the war in Ukraine and the impact of inflation have added to the unfolding implications of Brexit, the impact of COVID and growing environmental worries. Whilst climate change remains consumers #1 concern
, It’s the spiralling cost of living that is making them most angry, ahead of tax avoidance, crime, politics and cuts to public services. The loss of trust in institutions has long been documented, what’s emerging is the potential for brands to fill that gap. But how can they best do that? Whilst we know brand purpose can’t isn’t a substitute for a quality product, almost three quarters of Brits believe brands can play a role in bringing society together, whilst 63% prefer a brand that is environmentally friendly rather than a good price. It’s also encouraging that inclusivity is gaining mainstream acceptance with the majority of British consumers now preferring to buy from brands that speak to the whole of society. It’s perhaps surprising that Supermarkets are now more trusted than banks, airlines or government but considering that they’re actively and visibly tackling most of the agendas that consumers value perhaps more brands should follow their lead?