“How to move from doom to boom, and navigate a recession.”

By Matthew Hayes, Managing Director, Champions (UK) plc.

Despite apocalyptic predictions of doom, the chances of the UK economy slipping into recession are becoming more remote with each passing week. One recent report conducted by S&P Global and consultancy Accenture looked at how businesses and families are trying to fend off the cost of living crisis. The study concluded that a net balance of 43 percent of UK businesses are actually buoyant about the economy over the coming year, the highest level in a year.

It’s a positive step forward from January, when reports suggested British business confidence had hit a two-year low, which only amplified fears that the UK economy is sliding into recession.

I haven’t been hugely surprised to see the dial shift in this way. At Champions (UK) plc, our team is built to create strategies for growth and success, whatever the market conditions throw up. Yes, growing amid a recession is harder, but it’s not impossible, and by introducing a number of measures into your organisation, it can be done cost effectively, quickly, and at scale.

If there is one thing that any period of economic uncertainty can guarantee, it’s reduced consumer spending. As a result, it is vital to reform your marketing strategy. A reflection of changing consumer trends during a recession is well illustrated by what is happening right now across UK supermarkets. According to experts at the consultancy firm Kantar Worldpanel, hard pressed shoppers are snapping up shops’ own brand goods at record levels.

This is to be expected - consumers are less willing to indulge themselves with luxuries during periods of economic instability. Businesses, therefore, need to employ strategies that aim to maximise consumer engagement and retention whilst not operating in a way that betrays their traditional brand ethos. Businesses need to utilise their intuition and acknowledge the facts. And the facts are these: adapt… or die.

But how?

Promotional drive

During the 2008 financial crisis, marketers spent 14% more on online ads over the first quarter of 2008 than in the entire previous year. A successful and personalised promotional campaign can be critical in boosting consumer-engagement and retention. Reinforce this messaging by clearly showing how the product or service you provide delivers on the needs of consumers. 

Costs

All businesses will be looking to trim costs during a recession. But avoid employing the antiquated approach of cutting costs erratically and fulfilling the ‘status quo’ recessional approach. Ask if you can afford to defy the rhetoric and actually increase expenses in areas such as marketing.

Pricing strategy and product repositioning

Product repositioning is an integral part in providing one key foundation for long-term success. Closely examine the shifting consumer trends and spending correlations that are emerging in your market. Note that the youth typically flout lower rates of disposable income and tend to be more prone to price sensitivity. Therefore, there may be a greater exodus within their spending portfolios from more premium-based products towards cheaper substitutes.

Product pivot

Premium brands should aim to provide cost-effective recession proof products that act as a ‘cheap alternative’ to their traditionally high-valued product range. This, in turn, should reduce the potential for a hindered brand image whilst increasing sales revenue and boosting respective market share. It also demonstrates your company's expertise through versatility in product range and ability to empathise with the wider economic situation.

Discounts

Various discounts/offers in the form of loyalty programs are another key foundation. Demonstrate that acts of loyalty will be rewarded. Identify all emerging consumer segments and mount promotional campaigns that are specific to each one.

Sales and marketing

If your business isn’t actively trying to move forwards, it’ll inevitably end up moving backwards. At times of hardship where sales decrease, the mantra is not to cut back on sales and marketing activity, but you need to do more and not less. Doing more in a time where other businesses are doing less means you can do even more for the same price whilst grabbing additional market share. Use this time to stand out from the crowd and differentiate your business with minimised competition and amplified marketing activity. 

Establish new suppliers and try not to hold stock

If you’re currently sourcing raw materials from abroad, try and find domestic sources for similar prices, or a nation with a substantially weaker currency than the pound. Attempt to operate a ‘Just in Time’ system, where you hold no stock and products are shipped from the supplier to the consumer immediately. This will save substantial costs on warehouses.

Move towards an ecommerce-based outlook

Digitisation is gradually becoming more of a necessity in the modern-day. Removing tangible stores will be beneficial for your profit margins due to the eradication of rent and mortgage payments. Despite not benefiting from footfall sales, implementing various advertisement and SEO technology will immensely improve traffic diverted towards your site.

Remove underperforming products

Ask consumers to provide direct feedback and then make changes accordingly and use the Pareto principle. Work out where you generate 80% of your income with 20% effort and consolidate upon simply what works and generates consistent results.

Typically, when a recession strikes, businesses adopt an erratic and reactionary cost-cutting stance, where employees are viewed as the primary outlet to reducing significant costs. Whilst this may be necessary, hostile cost-cutting procedures are most likely to have a destructive effect upon the remainder of the workforce. By adopting the measures outlined here, you will create solid foundations built to help ensure your business has the apparatus to morph itself into an assertive market leader once the downturn passes.

Remember to keep your business moving forwards, not backwards – the cost of percentage of voice in the market is far less during such periods, therefore, a recession can be the perfect opportunity to take action and stand out from the crowd.