The initial clamour of the Brexit result has died down and the reality of the UK leaving the EU is settling in. The mood left is one of uncertainty – which is bad news for consumer confidence and with it, spending. At the same time, if the recession taught brands one important lesson, it’s that with change comes new opportunities for those who respond positively to the emerging consumer needs.
LIVES ON HOLD
Britain’s decision to leave the EU is having a negative impact on consumer confidence, with it recently falling right back to where it was in 2013 when Britain was emerging from the recession. This is in turn affecting consumer spending. Plans to buy homes, travel abroad, or make any large purchases have been put on hold. Travel has been hit hard by the result – with consumers now lacking the desire to travel abroad due to looming question marks, such as lower exchange rates, higher airfares, and poorer holiday protection. Border control and migration are further anxieties; with uncertainty over the EU raising fresh debates over how these issues will be handled going forward, consumers are increasingly nervous to travel due to terrorism concerns.
These anxieties are prevalent on our communities, where over sixty thousand real consumers share their thoughts and opinions. One member admitted to cutting back their travel plans significantly due to financial worries whilst other consumers show a reluctance to change their travel plans, but the implications of Brexit may force them to do so.
The prediction by economists is that Britain will be plunged into another recession – pushing down house prices and weakening the job market once more. This bleak depiction of the future painted by the media has nightmarish echoes of Groundhog Day, suggesting we’ll rewind back to the same position we were in eight years ago. But does this really mean a return to the recessionary mind-set, or have we moved on from then?
A SAVVIER CONSUMER
Our experience of the recent recession suggests we are now equipped with the correct tools and knowledge to withstand something similar again – understanding we lacked in 2008. During the recession we saw a shift in consumer values and desires. Prior to the crash consumers desired luxury purchases or higher spec upgrades, spending on credit to attain this. With less disposable income, experiences became valued over material goods, rediscovering the importance of family, friends and the natural world.
Following the recession, luxury spending increased but recessionary lessons are still ingrained, particularly the new understanding of value. Pre-recession many equated value with price, whereas now we have the tools to understand value on multiple levels: price, product effectiveness and longevity, emotional attachment or happiness value, and so on. These changed attitudes can be shown through a wide acceptance of discount stores. Where previously discount stores and own brand products were frowned upon, now they have become accepted as good quality products at reasonable prices. This is because our perceptions of value have changed – today value has many layers and dimensions for consumers who are wiser, more experienced, more sophisticated and financially savvy.
Whilst consumers may have the tools and financial know-how to withstand Brexit, lack of certainty creates fear for the future and brands are doing little to soothe these fears. In the raft of post-Brexit reporting, analysis, commentary and prediction, the voice of brands have been largely absent. Brands seem fearful of saying or doing the wrong thing, this has left a void.
This need for reassurance is reinforced by what we’re seeing on our client communities. Consumers have expressed concern with the post-Brexit silence, worried brands are “sitting on the fence”. Customers have stated brands “need and should be keeping customers informed of developments as and when they occur” .
There is now an opportunity for brands to provide reassurance to consumers, showing they will still be present and supportive through this political change. This is particularly important for the financial services industry, as consumers are likely to feel anxious about the stability of their savings and investments. As one of our community members commented, “We may well end up outside the EU in a worse position than we are now. This can only be bad for investment and my pension. I am worried!”
Our clients Nationwide and GlaxoSmithKline (GSK) are tapping into these demands, breaking the silence with structured plans.
Nationwide have released a ‘five point’ plan to approach post-Brexit Britain, which promises to reduce costs for First Time Buyers, as well as maintain their top paying savings rate. Nationwide are also providing a Brexit support panel, designed to give constructive solutions to the challenges now facing consumers (8). This statement shows forward-thinking and preparation, providing some comfort for the uneasy consumer.
GSK’s approach to Brexit is one of optimism and prosperity. The global brand have announced a £275m expansion of their UK manufacturing sites. For chief executive Sir Andrew Witty, the country remains “an attractive location” despite Brexit. Britain’s leading position in the sciences, as well as our skilled workforce, is also said to have influenced the decision. This serves as a positive message to both consumers and other businesses, highlighting that Britain’s skills and talents haven’t changed as a result of the vote, and the UK will still be highly valued even when separate from Europe.
By providing a rounded insight into company financials and plans, these brands are helping to calm anxieties, boosting consumer confidence as well as build brand trust and loyalty. Whilst these approaches aren’t promising to answer what will happen following Brexit – they are providing transparency, as well as showing forward thinking and preparation. Even just by simply acknowledging Brexit, brands can show they care about this issue and its implications for the consumer, ultimately helping to build trust and confidence amongst their customers.
Brexit brings about its own questions and challenges separate from the economic concerns. The 48% remain / 52% leave result has shed a light on the internal differences and multiplicity of opinions within Britain.
Widely reported is the contrast of votes between different age groups, with pensioners around three times more likely to vote leave than young voters. As well as this, majority votes also differed depending on the area of Britain, with cities such as Manchester and Brighton pro-remain, and the East of England and the Midlands supporting leave. This difference of opinions opens up further questions about the identity of Britain – with so many conflicting voices, does Britain have a shared sense of identity?
These debates raise challenges for brand communications. In a country of multiple opinions and perspectives, how can brands show inclusivity in their messaging, targeting the interests of everyone?
An advert from Benenden is a great example of reactive, reassuring, and most importantly inclusive marketing. Their recent marketing campaign for health insurance advises onlookers to ‘keep their world turning’ with their ‘affordable alternative to private healthcare.’ With a subtle nod to post-Brexit anxiety, the advert perfectly showcases a positive mass message which impacts on an individual basis. Benenden have recognised that Brexit is a renewed opportunity for brands to connect with consumers on a truly emotional level. Although Britons may have voted differently, we all need to deal with the new reality and Beneden will provide a helping hand through these uncertain times.
BRANDS MUST BE RESPONSIVE
With the implications of Brexit unknown at present, the consumer environment is continually changing as we learn more of its effects. Brands today need to act quickly to understand and respond to the changing consumer mind-set. It’s time to do some research on the post-Brexit consumer, their needs and expectations. Looking back again to the recession, the successful brands were those who responded to changing consumer needs by producing or re-marketing products to target these demands.
Aldi is an example of a brand who thrived during the recession due to understanding consumer needs. Aldi’s slogan introduced in 2008, “spend a little, live a lot” resonated with consumers. Reluctant to spend money on expensive brand products, Aldi presented their products as an alternative – “like brands, only cheaper”. Aldi began offering both everyday essential products, as well as products unconventional of other discount stores, such as quality but low price wine and lobster. Consumers could now focus on experiencing and enjoying the products they love without spending their valued savings on brand names. As a result, Aldi managed to lure wealthier shoppers through their doors, claiming half their shoppers were now from the wealthier ABC1 social groups. Brands like Aldi recognised that consumers are still spending during financial crises, but the way they’re spend is changing.
Early indications across our ongoing research communities show some clear trends. There is a real desire from consumers to maintain existing plans and commitments, but these have been put on hold in this period of uncertainty. As a result, consumers want to be informed and reassured by brands. They want brands to show that they have a post-Brexit plan and they don’t want them to follow a policy of ‘wait and see’.
For brands, Brexit can be seen as an opportunity to review brand messaging and communications, in order to make them relevant to the new consumer mind-set. Releasing reassuring statements and future plans is one approach. Creating new or tailoring existing products and services to target the new consumer mind-set is also important. The emerging needs for quality, long-lasting and budget-friendly products and services will need to be addressed. Finally, shifting advertising to target consumers emotionally is also key. Showing how the brand can be a ‘helping hand’ during these times of uncertainty, rather than playing to their anxieties, will provide the reassurance consumers need to keep spending and not put their lives on hold.
“Some certainty in these uncertain times is a comfort”, Join the Dots Community member.