Deloitte’s latest predictions of a recession is the latest blow to retailers after a long line of setbacks that span from labour shortages to ongoing supply chain issues. Consumer confidence may be down, and businesses may be forced to compete harder for every dollar spent, but a recession is not the death sentence some might think it is. 

Despite the pessimistic forecast, the truth is that compelling product and service offerings will always find a way to remain relevant. Whether the economy is up or down, well-managed brands remain in a strong position to ride out temporary market fluctuations. A case in point is the pandemic which severely damaged some businesses but propelled others to greater heights of success.

Lessons from the pandemic

The businesses that comfortably and profitably navigated Covid not only improved their chances of surviving the next calamity, they also gave themselves a greater competitive advantage by learning how to handle customers during tough times.

These Covid success stories are agile operators that have wholeheartedly embraced digital innovation to their advantage. They are brands that have maximised their presence across multiple online sales channels to great effect from social media outlets to big ecommerce platforms. During Covid, they made sure to pivot their offering to meet customers where they were: fashion houses switched to loungewear, restaurants delivered groceries, tech businesses created offerings to make it easier to work from home and so on. 

A recession intensifies the need for products to serve a distinct purpose for consumers; to some extent they also need to tell a story too. As with Covid, businesses that are able to move the fastest in a recession to identify needs and meet them will reap the biggest rewards. And when pursestrings are tight, it’s essential that brands deliver big on value, consistency, and dependability. 

Every minute detail, from packaging to quality, has to be exceptional in every way. In a recession, consumers are especially sensitive to the emotional aspect of an economy in a downturn. What once was a simple question of choice between competing luxuries takes on a new dimension when necessities like rent and groceries become harder to afford.

This is why purchases of non-essentials become even more of an emotional decision driven by feelings as much as its core function. When choosing to spend on non-necessities,consumers think long and hard about its benefits to justify their spending. Motivated by the need to be soothed, they seek certainty and pleasure from small, reliable comforts.

A 2014 study from the Journal of Consumer Psychology found that retail therapy immediately made people happier and fought lingering sadness. These researchers found that sadness is generally associated with a loss of control. The act of shopping restored consumers’ sense of autonomy, proving that therapy can lift your mood no matter how small the purchase.

How to fortify brands against economic downturns

The end of the lockdowns in 2021 heralded an optimistic new era for the retail environment. Indie brands were being founded at the rate of knots with high-priced products to match. Two years later as sluggish spending and high inflation engulfed the world, these same brands are disappearing as quickly as they appeared.

The brands left behind are facing consumers with far less disposable income, who want to spend a lot less and only on products they know will work for them. In a time of recession, the obvious pivot to win over price-sensitive consumers is by meeting them at that lower price point. Brands that are already occupying a lower price bracket but offer maximum value for money are well placed to strategically ride the downturn and come out ahead of their competitors. 

Brands in higher price brackets can leverage discounts by creating a lower-priced but similar alternative rather than slashing the cost of star products outright. An entry-level product would serve as a window to the brand’s higher priced offerings and have the advantage of converting them to more sales post-recession. This also helps create a generational brand where businesses have the chance to hook in a loyal lifelong consumer.

Brands that have a best selling product should double down and focus on honing its value proposition. Getting back to the basics of price, positioning, and packaging is a good way to pack in more value in products. 

Cutting costs will also help brands weather the hit to their bottom line – by speaking to manufacturers, businesses can leverage more efficient and cost-savings processes to shore up its reserves. 

Last of all, having a distinct brand purpose is essential to outlasting challenging economic times. Brands with a purpose beyond profit distinguish themselves from their lesser counterparts. They are often the ones that are most adept at maintaining consistency, creating innovative products, and creating value for customers. As master storytellers, these brands meet their customers’ emotional needs and much as physical. 

Retailers that aspire to greatness must have all these qualities and more as they are what separates evergreen brands from one-hit wonders.

Rohan Widdison is CEO of New Laboratories.