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As the consumer braces for the winter of discontent ahead, what do the next few months really look like for consumers and brands?

9 December 2022

As the consumer braces for the winter of discontent ahead, what do the next few months really look like for consumers and brands?

As our phones have been inundated with notifications and headlines of inflationary times, at MCCP we investigated what the economic outlook for Ireland is really like in the coming months.

The reality? The forecasts for Ireland are much brighter than the media has led us to believe. Although inflation has risen to a 20 year high in Ireland, forecasts show that this inflation is expected to dip in 2023 and when compared to other European countries, Ireland’s forecast for next year is optimistic.

We have seen encouraging signs of this in the past week as the European Central Bank reported that inflation eased far more than expected in November, with Ireland’s inflation slowing to 9%, compared to 9.4% a month earlier.

Equally, the CSO reported in Q2 that unemployment is now lower than pre-pandemic levels while simultaneously, Irish households are also saving 20% of income, indicating that positive habits developed over Covid are sticking.

Despite low unemployment levels, consumer sentiment fell to 42.1 in September, the lowest level since 2008. As sentiment dips lower than the height of life in lockdown and before any sign of a vaccine, we investigated why is this the case and what is the difference between now and 18-24 months ago?

The reason? Although society has reopened, the cost of living crisis is having a universal impact across demographics, everyone in every household is feeling the pinch and feeling vulnerable when looking to the months ahead.

So, as the consumers’ resilience is being tested again this winter, how are their behaviours evolving?

Online and list-based shopping to avoid impulse purchases:

In September 2022 Kantar reported that 1 in 10 Irish shoppers are now opting to buy their groceries online. Equally, Musgraves found that 73% of shoppers are now sticking to shopping lists to avoid unnecessary purchases.

Meal prepping on the rise:

Musgraves also reports that ¾ of SuperValu shoppers are now prepping meals in advance and cooking more in batches indicating the consumer is changing behaviour to cut not only grocery costs but to minimise their electricity bills.

Big-ticket expenses on the long finger:

Recent MCCP research has found that consumers are actively making cuts in household expenses such as gym and sports club memberships and grocery shopping and putting larger expenses on the long finger such as renovations in the home or upgrading their car to cope with rising utility

Treats remain but in smaller quantities:

As consumers are forced to make tough decisions to cut back utilities and household expenses, MCCP research has found that consumers are anchoring their lives around the finer things in life, treating themselves to smaller, everyday pleasures by keeping their cup of coffee and pints at the weekend in reduced volumes, they are seeking smaller and more modest treats to elevate occasions in a more affordable way. In Behavioural Science, this behaviour is also known as Treat Brain.

During lockdown, behavioural scientist Paul Dolan spoke to this in the Financial Times.

“Life is a series of distractions, I think in part if we actually stopped and thought about the serious stuff, our heads would explode.

Before coronavirus, many of us were busy most of the time and less in need of treat-based distractions. We’ve certainly had enough to seek distraction from the past 18 months.”

This behaviour that we saw during the pandemic is still relevant today. Consumers are determined to find joy in simple day-to-day moments and treat-based distractions to escape from times of ongoing uncertainty.

So, in the midst of negativity in the media, how can brands support consumers in the coming months?

Demonstrate value beyond price:

As private labels are likely to be on the rise as consumers seek to cut expenses in grocery, it is crucial for brands to avoid price wars and instead, demonstrate the value that they offer consumers beyond price e.g. via personalised solutions, customer service and loyalty benefits/rewards.

WHAT YOU MUST ASK YOURSELF: IS MY VALUE PROPOSITION RIGHT?

Show empathy by offering flexible solutions for the consumer, meeting them at least halfway:

Over the pandemic, brands went beyond comms to launch tangible initiatives to support evolving needs of communities, there is an opportunity for brands to re-ignite this approach as many households will struggle to get by in the coming months.

WHAT YOU MUST ASK YOURSELF: DO I HAVE AN INNOVATION PIPE TO SUPPORT CUSTOMERS AND IMPROVE RELEVANCE?

Give consumers inspiration to anchor their lives in smaller, more modest treats:

As consumers seek to have more modest and affordable treats to elevate their day to day, there is an opportunity for FMCG and Alcohol brands to demonstrate their brand’s relevance and role in treat-based occasions via recipes, messaging and activations.

WHAT YOU MUST ASK YOURSELF: IS MY BRAND CONNECTING IN THE MICRO-MOMENTS THAT SERVE AN IMPORANT ROLE IN OUR CUSTOMERS LIVES?

Despite rising inflation and changes in prices within the current climate, this is not the same as the 2008 recession. The current context is very different from before. Yes, prices are rising, and we will see some change in demand patterns, but we are also living in a time where unemployment is low, and income and savings are on the rise.

As our founder and MD Kay McCarthy stated at the recent MII Breakfast Series, “We need to brand our economic cycles like the way we brand storms. This is not the same as 2008, the fundamentals are positive.”

The plummeting consumer sentiment stems from a short-termist view and is being hyped from ongoing negative media coverage and scaremongering, presenting the perfect opportunity for brands to pivot to meet consumer demand to ensure brand loyalty and long-term success.

We are currently working with our clients to co-create value propositions, adapt their innovation pipe and create new brands to support consumers in these interesting times, we would love to share this with you in person over a cuppa in our office.

If you would like to hear more about MCCP’s ways of working as your brand strategy partner, and how you can understand more about your consumers’ needs in the current context, contact us via meetus@mccp.ie.

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