Three Ways to Turn Recessionary Lemons into Lemonade
Filed Under: Shopper
Vice President, Quantitative Research
Although most ‘economic experts’ predict a recession in 2023, this is not the time to panic. The US has been in an official recession for less than 15% of all months across the last 70 years; so, we’ve enjoyed more periods of growth than decline. Then just look at the resilience we’ve had over the last three years – we’ve survived COVID, supply shortages, inflation, natural disasters, and so much more. So, how can we think of a potential 2023 recession as a way to turn lemons into lemonade?
Necessities & Affordable Indulgences
During economic downturns, shoppers gravitate towards necessities and affordable indulgences in the form of ‘value vices.’ Necessities are categories that fulfill basic living needs like healthcare and food, while value vices, like candy or a trip to the salon, are affordable treats that shoppers use to ease the discomfort they feel from the economy and having to cut back on their spending.
Making shoppers feel like they can’t live without a particular product or service, whether that perception is real or perceived, never goes out of style. But having marketing strategies that address this tactic as well as ways to provide a treat or sense of comfort are even more important during a recession.
While necessities and affordable indulgences definitely fall into the “Back-to-Basics” category, there are more elements to this theme, as shoppers fondly remember pleasures and pastimes that remind them of easier, less expensive times and experiences.
While some of the Back-to-Basics revolve around pleasurable pastimes like cooking and gardening that also have cost benefits, others take you to a time that you remember with rose-colored glasses, like that song or fashion that gives you comfort and happiness aback when the world seemed less complicated.
Private Label is an interesting Back-to-Basics. These products have evolved and expanded into different categories and price tiers, giving these brands the dual opportunity to be both necessities and affordable indulgences that increase during economic downturns by providing shoppers with quality that matches or exceeds the price charged.
Most companies have regular planning and budgeting cycles to ensure the organization has laid out strategies and tactics to achieve its goals. This planning is important going into a recession, as are contingency plans to address the unknowns since no one has yet developed a full-proof crystal ball.
Having a game plan ensures that steps a company takes before, during, and after a recession are thoughtful and lead to continued growth over the long haul. A plan also allows a company to stay true to its brand DNA and not undertake tactics that could degrade its image in the short or long term. The plan also lays out how to manage finances properly, which can be the difference between a business thriving or dying during a recession.
Want to learn more?
Tune in to our upcoming Emerge Smarter webinar, Is Your Brand Recession-Proof? Learn From Some That Are.