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Marketing Brand Strategy Ecommerce

Brands that empathize during the cost of living crisis will thrive

By Andrew Turner | Chief Revenue Officer



Opinion article

September 23, 2022 | 7 min read

It pays to be kind. For The Drum’s e-commerce deep dive, Andrew Turner of agency Incubeta explains how brands are rewarded for being mindful in their marketing efforts amid the recession.

Glowing shop sign reading 'hello good day'

During the cost of living crisis, brands will be rewarded for transparency / Kido Dong via Unsplash

The next few months will be difficult for consumers: rising energy prices coupled with the highest rate of inflation in 40 years has led to an almost unprecedented collapse in consumer confidence.

A study released by PWC in June reported that across demographics, consumer sentiment was sitting at its lowest point since the pandemic. This figure is expected to fall even further as the utility crisis rolls on and another difficult winter looms.

Understandably, consumers are prioritizing spending on food and energy, while purchasing interest in fashion, entertainment, travel and leisure has diminished dramatically. Research suggests 55% of consumers will be cutting back on luxury items for the foreseeable future.

What does this mean for e-commerce?

On the surface, the growth of digital remains buoyant. Retail sales in the UK continue to be dominated by online shopping. According to the Office of National Statistics, in July 2022 the percentage of total online retail sales amounted to 25.3%, an increase of 6.6% since July 2019. Nevertheless, e-commerce is not insulated from economic trouble on the horizon.

For one, the cost to compete in the online space is growing, with an ever-increasing number of brands establishing digital presences. The average cost-per-click has followed an upward trend over the years and will likely increase with inflation. Combine this with more considered and less frequent purchasing from consumers and a drop in average order value (AOV): brands will need to have a carefully laid-out e-commerce strategy if they wish to remain financially viable.

To shore up their e-commerce performance in the face of this downturn, e-commerce brands must put themselves in the shoes of consumers. This means taking into account how the cost of living has affected attitudes to purchasing. By offering value and assistance in a transparent, empathic and helpful way, e-commerce brands can come out of this period with even stronger customer relations.

Present product value transparently and dynamically

With consumers more cost-conscious than ever, it’s essential that your e-commerce platform puts your best-value products center stage – effectively doing the research for customers.

Highlighting value-based ranges will attract first-time purchasers and allow you to scale customer AOV down the line through a well-executed CRM strategy. Integrating benchmarking software into your platform will ensure your products remain competitively priced, while margins are protected.

With supply chain issues set to bring further disruption, making sure that the products listed on your website are actually available is crucial. If ads lead a consumer to an out-of-stock item, it will only frustrate users and deter them from returning to your site.

Target consumers where they are

As a result of the pandemic, marketplaces worldwide have seen exponential growth. In fact, Europe has the third largest e-commerce market on the planet with online sales of $498bn in 2021.

Consumers are spending more time at the top of the funnel researching products, ensuring security and maximizing value. For this, they rely heavily on search environments and online marketplaces such as Amazon. Making sure your e-commerce strategy is integrated with these channels is highly recommended.

The growth of social media, particularly short-form content platforms such as TikTok, is fueling an influencer-led retail niche. Influencer marketing should not be treated as an add-on to an existing plan, but as a channel with its own set of KPIs and metrics.

TikTok usage is highest among 18-35-year-olds, the demographic who are expected to feel the impact of the cost of living the most. This presents a chance to establish brand loyalty with a traditionally difficult-to-target cohort. That said, it’s important to pair your product listings with the right messaging. Not aligning this carefully with current consumer sentiment will come across as out of touch and harm brand loyalty.

Reward your customers

Making sure that your e-commerce offering is attuned to the individual customer should be an integral component of your strategy at any time. It’s particularly important during an economic downturn. Remember: current customers are your brand ambassadors, and are a valuable asset. Looking after them during difficult times, with reward schemes and promotions (for example), will generate more interest and drive conversions from both existing and new customers.

The key is to make sure that offers and promotions remain relevant. With consumers increasingly concerned by the waste produced from retail and fast fashion outlets, it is better to hold off and deliver promotions that are more likely to be received as genuine.

Despite reduced spending power, consumers still haven’t given up their expectations of quality, choice and service. E-commerce brands that combine empathetic messaging with fair prices, helpful promotions and rewards are likely to generate a loyal customer base at a time when it’s needed most.

For more dispatches from the frontiers of selling online, head over to our e-commerce deep dive hub.

Marketing Brand Strategy Ecommerce

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Incubeta is a team of over 800 creators, thinkers, makers and doers working across 22 offices globally to unlock business growth for clients including Google, Hyundai, Netflix, HBO and L'Oréal. Incubeta combines capabilities across the full spectrum of digital disciplines to deliver standout outcomes at every brand touchpoint, from awareness to fulfilment.

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