why slow economic times propel creative thinking
by: Natalie Baker
Recession = progression?
In times like this, the concept of lean becomes more than a business catch-cry, but a cold hard fact as consumer spending shrinks, and company fat slims.
Paradoxically, industries and brands CAN thrive during times of recession, and we LOVE to turn a negative Nancy situation into something sunny. So, let's talk about that...
Who typically weathers a downturn storm?
When the going gets tough, the tough get going... to Kmart! Discount retailers thrive in times like these as shoppers switch to "affordable luxury" products.
The term "lipstick index" was coined by Leonard Lauder, chairman of Estée Lauder, in the 2001 recession. It refers to the phenomena that lipstick sales actually go up in times of recession because people swap costly luxury for more practical indulgences.
Similarly, as extravagant indulgences get dialled down, sales of more affordable personal "pick me ups" ramp up. This includes things like cigarettes, liquor, sweets and chocolate.
As consumers tighten the budgetary belt, services specialising in repairing, upgrading and maintaining existing equipment and products thrive - "renovators hire as builders fire".
Gravediggers, taxmen, hospitals and health care workers can dodge the recessionary bullet as these are typically industries that are part of life’s necessities and will continue on, no matter the economic climate.
Which brands can we learn from?
Want to find a way to come out on top during hard times? Here are some companies that have successfully innovated during a downturn (the recent American recession) by leveraging product, comms and messaging.
During the same time, Lego experienced profit growth of over 63%, reaching an all-time high of profitability.
Expansion into the global market was a key PLAY the business made to succeed. Lego expanded into Asia and made specific efforts to build sales across Europe, rather than fixating on the American market.
Over to you
How prepared do you feel for the change in consumer behaviour that comes from an economic downturn? What could you learn from the examples we have explored?
This is your chance to get one step ahead of your competitors by working on your product offering and messaging. Check out our Product Testing and Brand and Comms solutions, or give us a call on 02 8097 0200 to get the conversation started. Connecting you with your ever-changing Australian consumers is our forté!