The headlines say it all. Energy price hikes and the overall cost of living is truly at a crisis point. Supply chain issues, the Ukraine war and rising raw material costs are all contributing to soaring food prices. Kantar recently released data showing that grocery prices were 5.9% higher in April than a year ago, the biggest annual increase since December 2011.
As consumers feel the pinch, brands and businesses are in the thick of it. With the rising cost of raw materials and wage inflationary pressure, there is a real challenge for brands to continue making products attractive to customers as disposable income is shrinking. In order to tackle this, brands need to get creative with innovation and strategic partnerships.
The business of brand equity
The no-discount strategy has worked for some of the world’s biggest brands – Apple is a prime example. But it’s not the only element that builds a brand. A brand only carries equity if it delivers an extra value-add compared to its competitors and it takes time for shoppers to learn this. However, brand equity can be gone in an instant – it’s estimated that it takes 0.05 seconds for a shopper to form an opinion about a brand’s website. Once brand equity is gone, it’s a long road to get back on track. So, plastering discounts all over a website could be one such way to undo all that good work. We encourage businesses to explore ways to incentivise a purchase by increasing the value a customer receives. How? We've been exploring different technologies to simplify this process:
Reskinned provides a takeback scheme for fashion and apparel. Reskinned promises to reuse, recycle and repurpose 100% of what is sent to them – to help close the loop. Brands that partner with Reskinned can therefore offer their own products and brands at a potential discount without giving away brand equity. With consumers pushing businesses to be better, more purposeful and sustainable, the offering of a repurposed pre-loved item will carry quite a bit of value for many customers.
Nibble is a smart on-site negotiation tool that lets customers make an offer on the product page through a bot. This helps increase sell-through whilst avoiding deep discounting at the end of a season. It still offers what some shoppers will be looking for – the thrill of a bargain. But it’s also achieved +50% in conversions by using the AI-driven tool.
ProQuo AI is taking a different approach to help businesses protect the bottom line as well as brand equity in this difficult economic landscape. ProQuo AI is an AI-powered platform that uses survey results and consumer data to help businesses check in on brand sentiment in real time and ensure that the creative decisions they’re making are resonating and building brand equity.
Giving sales a sporting chance
Sometimes discounting might be a necessary strategy – to shift end of line stock for example. If targeted as a conversion tool and executed well alongside complementary brand enhancing features like excellent customer service and simple UX or technologies like those mention above, brands can help avoid the erosion of brand equity. Customers fall broadly into a few categories. The behaviour, motivation and likelihood of a conversion is different for a bargain hunter versus a loyal customer or a new customer, for example. Testing customer segmentation tools to help target discounting can be a great opportunity to protect brand equity.
As we review the 2022 calendar, there are changes afoot that will alter the promotion and discount landscape. For example, The FIFA World Cup – one of the world’s biggest sporting events is off-cycle this year – moving this prime promotional event into the golden quarter for retail. It also means that there are new opportunities to use as promotional hooks, such as the Women's Euros, which England is hosting and the Women’s FIFA Football World Cup. These shifts mean on Black Friday this year the US and UK will have its World Cup football showdown. As an event that last year attracted £9.2 billion in consumer spend, the distraction of one of the biggest sporting events will have a considerable effect. This is compounded by the recent shift away from Black Friday sales, in support of sustainability. Purpose-led brands are taking a stand against the over-consumption prompted by heavy discounting and are instead choosing to also give to charity alongside – or instead of – promotions to help continue building their brand and what they stand for.