Recent developments in Cyprus, especially the imposition of capital export restrictions and the use of depositors’ savings as sources of bailout funds, have become a fundamental challenge to consumers’ confidence in moves made by governments. The resulting movements of capital to destinations outside the Eurozone have yet to make a full impact on national demand, but nevertheless the effect needs to be factored into brand and customer strategies.
Moreover, whilst politicians attempt to sway the public every five years, with the help of brands a retailer manages to persuade most of the population to come to a store and pay hard-earned cash for ideas, sometimes several times a day, in spite of economic downturns.
These developments have heightened the need for NAMs to be sensitive to the impact of political moves and retailer power on consumer behaviour. In other words, as consumers are made more uncertain of the future of the economy and consequential impact on jobs, they tend to rein in their discretionary expenditure. Those still in work, especially the savvy consumers, have become more demanding, are usually more discerning, and become unwilling to settle for anything less than demonstrable value for money.
In these circumstances, the savvy consumer’s already fragile confidence in branded products can be shattered more easily. Witness the impact of the horse meat scandal, where consumers learned that one of the most fundamental principles of branding – that a promise on the outside of a tin guarantees its contents – had to be added to their list of ‘second-guess’ precautions in deciding what to buy. In the same way, hard-won shopper confidence in the name above the shop door has been challenged…
The resulting pressures on suppliers and retailers arising from these new consumer demands have to adversely affect the performance of product and brand propositions, unless both parties combine efforts in attempting to restore consumer confidence in their joint marketing mix…
Given their sensitivity and ability to respond rapidly and cost-effectively to consumer-shopper needs, based upon their intimate knowledge of their target audience (name, address, income, shopping behaviour, hobbies, family circumstances, financial exposure, health…) it could be said that retailers and suppliers have more political power than the politicians…
Apart from their ability to withdraw large cash resources from banks in continental Europe as a result of uncertainties created in the Cyprus development, anyone doubting the potential power of retailers should bear in mind their ability to exercise real political power in two ways: direct influence on the consumer-shopper in-store and via direct impact upon the economy.
They can use price, the ultimate persuader, to modify the entire value-set of individuals in the aisle, whilst they can directly affect the economy via their leverage in terms of influencing/controlling inflation, the balance of payments, direct employment of significant numbers of wage-earners, and especially their ability to control access to in-store traffic-flow.
However, the continuing ‘triple-dip recession’ coupled with economic and jobs uncertainty, is resulting in a fall in demand that even state-of-art retailers are finding difficult to stimulate. Faced with unprecedented falls in demand, retailers’ ability to dismantle unnecessarily restrictive legislation not only removes barriers to increased selling opportunities, their ability to do so provides another demonstration of their political power, a power that depends upon maintaining consumer confidence in their brand.
Specifically, those in any doubt should reflect upon UK retailers’ track record in unilaterally dismantling restrictive and out-of-date legislation relating to limited shopping hours, Sunday trading, Resale Price Maintenance, and the Net Book Agreement, in recent years. Even if it takes a few ‘failed’ legal cases and prosecutions to make the point that a particular law has passed its sell-by date – so be it; especially when the publicity resulting from a £1,000 fine not only reinforces their image as the peoples’ champion, but would probably cost £250,000 via prime-time TV in the real world…
Retailers’ constant contact with the consumer means that any such success in their role as consumer champion in the outside world can be further enhanced at point-of-sale. Meanwhile, having built consumer confidence in the brand at point-of-consumption, and tested the impact via repeat purchase, brand owners can combine their ‘power’ with that of the retailer, in the aisle…a powerful and synergistic combination than can hopefully override the negative impacts of political actions…
Meanwhile, politicians might benefit from studying the supplier-retailer relationship and their influence on the population… Essentially, politicians are in the persuasion game, and need to establish (and maintain) the trust of consumer-shopper-voters in very trying economic circumstances…
A starting point could be to acknowledge that retailers and suppliers do so by managing expectations of the consumer, and then delivering even more than ‘it says on the tin’ with a degree of success that guarantees a return visit, and sometimes even results in a ‘tell a friend’ endorsement….
