Spend or Save: brands defying the cost-of-living crisis in 2023

A round-up of key takeaways from our latest webinar; hosted by Tim Hussain, Director of Solution Design and Product Strategy at OLIVER, featuring Sue Azari, E-commerce Industry Lead at AppsFlyer; and Ross Caveille, Co-Founder at Acorn-i.

Brands and consumers alike are navigating a storm of financial uncertainty. From rising inflation rates to a cost-of-living crisis and a recession, 2023 budgets are tight and must be re-directed to survive the upcoming challenges.

With the doom and gloom that many retail and FMCG brands will face, are there still opportunities for businesses to adapt and succeed in the new market environment?

The latest cost of living data from Kantar’s Media Trends and Predictions Report suggests there are, “consumers in Great Britain more willing to shop around and try new brands that might stretch their budgets further.”

So, how can brands be a help not a hindrance to customers when they need it most? How key will D2C models, seamless shopping experiences, and diversification of product offerings be to retailers who want to position themselves for success?

In our latest webinar, experts from AppsFlyer, Acorn-I, and OLIVER discuss how brands can not only survive but thrive in the face of financial turbulence by exploring ways to deliver more modern and streamlined shopping experiences for consumers.

The right price is paramount, but so is prompt postage

Sue Azari highlighted that brands are adapting in different ways to combat consumers’ price sensitivity. “We’ve seen some brands in the necessity goods industries – from supermarkets to drugstores – are shifting money away from brand campaigns to allow for price freezes” in a bid to communicate value in these trying times.

Ross Caveille added, “with consumers able to shop around so much more in search of the best deal, getting the right price is key. But another key factor is shipping costs and times. Our research shows a clear link between conversion rates for sales increasing as your delivery time decreases.”

Consumers have new expectations, likely influenced by ecommerce giant Amazon, in terms of both getting the best deal and a speedy delivery service. If brands only focus on price-matching competitors but have a slower shipping time, consumers will likely opt for the faster and more efficient brand.

Brick-and-mortar stores are making a comeback – but with a digital twist

With technology playing a greater role in enabling seamless omnichannel experiences than ever before, Azari thinks we are set to see a resurgence in physical stores but with apps playing a role in merging the online and offline worlds.

“We’re seeing this interesting move back to openings of physical stores. Marks and Spencer recently announced plans to heavily invest in their stores over the coming years, which will play a key role in delivering an omnichannel experience alongside the brand’s app which will elevate the in-store experience to new heights. So, for instance, you can order and click and collect and get your order within 30 minutes in-store. They also have a scan-and-go feature, enabling customers to scan items as they navigate the shop and pay through the app itself.

“It’s clear they are trying to work on those friction points within the store, such as long queues, fitting room availability, and easily lost paper receipts by giving app users the opportunity to pay, book changing room slots, and receive digital receipts of what they purchase, all via the app. It makes the whole experience feel very seamless.”

Caveille added, “The integration of apps into in-store shopping experiences also provides brands with masses of hugely valuable data about their users. Not only will it allow for a better understanding of individual shoppers, but brands will also be able to invest in curating informed in-store experiences to provide long-term value to their shoppers.”

D2C routes should be used alongside third-parry marketplaces, not instead of

Direct-to-Consumer selling offers huge benefits in terms of brand-building, data-gathering and ultimately delivering a shopping experience controlled entirely by a brand. And yet, it’s important to remember that D2C comes with many challenges, most notably, the high associated costs.

Caveille commented “it’s quite expensive building up a direct consumer audience and creating an environment that is standalone, not attached to a marketplace, shopping center, or a place where people will organically go from a footfall point of view. There are a lot of marketing dollars that have to go into driving traffic to your store, then there are tactics to retain them, message them, and incentivize them to come back. It’s not as simple as sending out the D2C channel and hoping people will find it.”

He added, “it’s important to consider the different ways shoppers discover brands, even within the same household. We have husbands and wives where one shops directly from a brand, and the other purchases from the same brand but via Amazon.”

Azari agreed, adding “I’ve spoken to businesses in the past where some of the top bosses said they have a preference for where they want their customers to shop and really, really try and force them down that avenue – whether that’s D2C or through third-party marketplaces. And that’s not the right thing to do. It’s crucial to have a diversified channel offering so that those options are there for the different types of customers. And that will only increase the size of your customer base.”

Azari went on to discuss the potential of hybrid approaches, listing sports clothing brand Gymshark as a leading example of merging the on and offline worlds. “Gymshark was a pure online player, they’ve always been D2C. Yet through the opening of their flagship store on Regent Street, they’ve diversified their offering. And it’s not just for transactional purposes, they also facilitate gym classes that you can apply to attend via the app. So, it’s trying to think about what you want the long-term connection with the consumer to be in between those purchase cycles and how to bridge the gaps in a way that builds brand loyalty.

Live shopping will soar in popularity over the coming years

When posed with the question “Online shoppers have grown quite accustomed to live stream shopping. What is the potential for ecommerce brands in this space now and in the future?”

Azari commented “I just spoke on this last week with a live shopping specialist at Farfetch. There’s a report from McKinsey which says that by 2026, 10 to 20% of all ecommerce sales could be live shopping initiated. It’s a channel that grew very, very quickly in China through their equivalent of TikTok, however, adoption in the West has been slow, until now. It’s seen particular success in the beauty industry because people want to see products on different skin tones and textures. So, I think there’s a huge potential, not just in beauty and fashion, but I think even within the home as well. It collapses the funnel from awareness to purchase. It creates this sense of immediacy and demand. And I think it’s great from a brand loyalty perspective too, so I’m a big, big fan. I think we are set to see more brands start to do it.”

Speed and agility are key to success in the ecommerce space

When discussing the barriers to success in implementing successful ecommerce strategies that are aligned with the evolving technology available to brands, Caveille said, “in a case study by the Boston Consulting Group where they surveyed 200 companies in the ecommerce space, behind the number one concern around talent was issues around performing well in the area of speed and agility. I think it boils down to having a strong organizational structure and access to technology and automation to streamline delivery. It’s not people OR tech, it’s about the value of both working together. To succeed and grow today, brands have to figure out how to utilize automation to free up some of the tasks traditionally worked on by people to free up their time to focus on accessing the data more easily and making decisions faster.”

Azari added, “I totally agree. I think companies who work in silos are disadvantaging themselves massively. But what I’m starting to see, which is quite interesting, is that companies are working on cross-departmental squads comprised of marketing, analytics, product, etc. all working together towards joint KPIs, allowing them to be more agile and aligned in their output.”

Watch our latest webinar here for more key takeaways: