As we end 2021, we have now had two (!) year’s experience of coping with the craziness of Lockdown and its consequences. For the past year, as we recovered from the shell-shocks of 2020, we have been allowed to focus on survival, firefighting our way through the challenges of 2021. We have seen rivals fail, amalgamate and watched as some have even excelled (See Fastest-Growing And Fastest-Falling Grocery Products Of 2021).
We have puzzled over category and customer mix, trying to define the business model best equipped to cope with post-lockdown challenges. We have experienced the remorseless onward march of disruptive online and discounters that have been under-estimated as they succeeded in taming the giants of traditional UK retail. Those of us that have survived now need to recuperate over the Christmas break, reflect on some lessons learned, and come back in 2022 determined to grow the business while others are still awaiting the consequences of Lockdown fallout and the unlikely possibility of government help…
Fuelled by years of low interest rates driving high levels of borrowing that has been disguised by printing money, with consumers and investors distracted by feelings of wellbeing arising from growth in house prices and share prices in one of the deepest recessions experienced to date, we are now facing a long-overdue return to inflation-reality in the New Year (See pound in your pocket inflation). Far from ‘delegating’ our inflation issues and business problems to the politicians, we now need to wake up and rely on our common sense re what is achievable via our resource mix in a very demanding inflationary environment.
We know that pent-up perceived inflation of up to 10% awaits us in the 2022 pipeline, despite politicians’ assurances to the contrary. It is obvious that any ’remedial’ action such as increasing interest rates run the risk of stifling fragile demand in a very uncertain market. We know that the world is in the process of some sort of fundamental re-set that will materially affect our business going forward. We have learned to park our concerns re the effects of encroaching restraints on individual behaviour and Covid enforcement and now need to focus on managing the results of the lockdown fallout on our business.
In practice, this means recognising the changes that two years (!) of Lockdown have wrought on consumers and their shopping behaviour. They are fearful, uncertain re their jobs, health, and security of themselves and their children going forward. In business we are trained to manage within rapidly changing and unprecedented scenarios, the consumer has had to learn to cope the hard way…
As a result, the survivors are emerging super-savvy, demanding demonstrable value for their money, and determined not to delegate any decision making to brand owners or retailers…
Meanwhile, given our need for hope and optimism in very trying circumstances, it is important to keep in mind that great opportunities can lie in unprecedented change.
The key word is realism. We need to be realistic in terms of what we are, what the current situation is, where it is headed, the possible effect on our business, what to do about it, and of course, how to implement the solution.
Those fortunate enough to own iconic brands, be they suppliers or retailers, already have a temporary head-start. They ‘simply’ need to focus on preserving the trust the consumer has placed in the brand over the years that have made it iconic and allow nothing to dilute that precious brand equity. Those with a less well-developed franchise need to focus on building and maintaining trust with a consumer that is gradually becoming increasingly sceptical of most official promises made over the past two years. The consumer’s default position has become distrust of any claims until the product performs to expectation in practice.
More than ever before, there is a consumer appetite for delivery to their expectation of what they thought they were buying: a combination of Product, Price, Presentation and Place, summed up in its description on the tin.
It was never more complicated than that simple premise. What has changed radically are the circumstances in which that exchange of value takes place. And it is the radical break with the past that makes 2022 a year of opportunity for those prepared to play fair, operating within the spirit of the law rather than relying on the ’protection’ of letter-of-law fine print.
The year 2022 will be one of wide open eyes, when the consumer-voter will begin to think for themselves, increasingly reliant upon their common sense, whilst constantly in the market for products that meet their needs, always delivering more than it says on the tin, always…
