Inflation has well and truly arrived and retailers are starting to feel its presence. The cost of almost everything is rising, from production to distribution, changing the way retailers do business. It’s not all doom and gloom, though. While ongoing economic uncertainty is certainly changing consumer habits, if your brand can cater to these changing habits, then you’ll be far more likely to weather the economic storm successfully. The pandemic had already shifted the way w
way we shop, even before inflation reared its head in earnest. As fewer people are travelling to work and many are spending more time on Zoom than in the office, consumers’ buying habits have undoubtedly changed – most likely permanently. Inflation and economic uncertainty have added another cherry on top of the pandemic pancake. So as life throws another challenge at us, how can retailers navigate the choppy waters? Think small to sell big The first step is to adjust your SKUs to suit the mood of the times. With discretionary income tightened, people are less likely to spend big on a new outfit, phone, car, bed or whatever is a big ticket in your particular retail sector. Instead, they’re far more likely to buy smaller items that can freshen things up without maxing out their budget. If you’re a fashion retailer, this could mean new accessories to change the look of an outfit, as a more economical alternative to a whole new wardrobe. If you’re a homewares retailer, it could mean some candles or photo frames instead of a large piece of furniture. At Group48, for example, our best-selling item is our reusable shopper. It’s a practical, fun item that doesn’t cost a bomb, but still provides the pleasure of making a new purchase. Products for the long haul It’s easy to assume that a tightening of the purse strings means consumers are going to shift to cheaper, fast brands to get their shopping fix, but we’ve found the opposite to be true. Consumers are spending less often, but when they do buy, they want to make a purchase that will last them many years, if not a lifetime. The stressors of economic uncertainty make fast fashion purchases feel frivolous. Consumers want trans-seasonal items that will last them longer than a single season. They are starting to reject the eye-wateringly fast trend cycle that social media propels. This attitude plays into increased awareness of sustainability and climate change, which is yet another note of uncertainty piled on top of economic instability. By buying products built to last, consumers are signalling hope for the future by protecting the planet. For retailers, the key is to invest in a few key high-quality products that can be sold season after season. Don’t be afraid to tap into macro trends, but avoid the lure of shouty micro trends that will die in just a few months. Adapt to your consumers’ lives Much has been written about the ways in which our lives have changed throughout the pandemic, and it looks like many of those changes are here to stay. Retailers should work hard to understand these changes and adjust their offerings accordingly. Working from home is no longer a temporary response to the pandemic, but a long-term lifestyle change. The recession means that even more businesses are set to ditch their expensive inner city offices for good, and video meetings are almost always the default. In the fashion industry, for example, workwear has morphed into lounge and activewear, while blazers have reigned supreme for their ability to smarten up a look – only to be removed as soon as the Zoom call ends. If you’re a fashion retailer, this means a heavy focus on accessories that can be seen from the shoulders up. Hair accessories, earrings, and glasses are all great ways to show a bit of personality on screen. Homewares could focus on wall art, plants, or decorative items that can jazz up a previously dull white backdrop. There’s a lot of doom and gloom in the media at the moment. It’s tough. We’re slowly finding our way out of Covid-19, and then we’re hit with inflation, flu, and floods. But instead of succumbing to the negativity and shrinking up, retailers ultimately need to recognise their purpose in their customers’ lives: to brighten their day and leave them with a smile.