Smaller brands that sell large appliances and clothing are most at risk if a recession is on the way. This is just one of the takeaways from NielsenIQ’s The Brand Balancing Act.
The global research focused on the influence of the new inflationary market on consumers’ perspectives on SMEs.
“Obviously, when inflation or a recession hits, consumer spending falls. With wallet tightening comes less impulsive or indulgent purchases,” writes Andrew Criezis, the Senior Vice President and General Manager of NielsenIQ SMB Business. “It certainly opens up brands in those spaces that are inflexible to take risk during a recession.”
NielsenIQ Brand Balancing Act Report
Criezis mentioned the two examples mentioned above. He then underlined some other ways smaller companies and their brands can be vulnerable in a downturn.
“Of shoppers surveyed who consider themselves exclusive to buying small brands, 17% choose private label to save money.”
Smaller packaging sizes
Another percentage (15%) want to buy smaller packages to save money.
“Small brands that don’t have an answer to economic measures or are amenable to a private label option may be at risk,” Criezis says.
The Brand Balancing Act also points out that the Internet makes all the difference during a possible recession. The survey found that one in four shoppers rates items online. This means that smaller brands that promote digitally may be doing well. The same goes for those small businesses that participate in larger online shopping events.
There’s more good news for SMBs in the report. Especially those that focus on giving back.
Buy small brands
“There’s also a healthy number of shoppers who want to buy small brands anyway,” he says. “That’s because 82% of respondents associate these brands with supporting the local community.”
Four out of ten shoppers also associate these choices with environmentally friendly promotions and sustainability.
“For some shoppers, that will still matter even during a recession,” he adds.
So, how can small businesses weather the storm with strategies and resources? Criezis suggests the answer is simple. You just need to do your homework.
“In these times, it becomes more important than ever to understand and research your customers,” he says. “Small brands need to delve into and understand how their customers buy products to save money.”
Smaller packaging might be an answer. Perhaps business owners should look at retailers’ own brands. And of course they have to look for new buyers. The Brand Balancing Act study found that there are 41% of shoppers who are “agnostic” when it comes to brand preference.
Criezis suggests bringing those people in.
He says, “Small businesses can use their local sustainable or healthy and natural storylines to appeal to those agnostics.”
Smaller brands should also take full advantage of digital marketing and other online tools. Shoppers like to buy these brands in local, independent and smaller stores. But companies still need to think about growth given a potential recession.
“To stand out and grow, small brands need to reach online shoppers and expand into larger retailers,” Criezis says. He goes on to say that they should use e-commerce tactics to position themselves for in-store retail.
The Brand Balancing Act also underlined some traditional values. For example, 90% of buyers who responded said affordability is most important. But there is a deeper layer that the report exposes. Criezis explains:
“The survey found that 82% of shoppers also choose a brand if they had an unforgettable experience. And 90% said they choose based on the quality of the product. Shoppers tend to say they buy the lowest priced item available. But the product has to be good, meaningful and deliver on its promises.”
Putting together a successful brand strategy to withstand the headwinds of a recession may sound difficult. But Criezis offers some closing suggestions based on America’s favorite pastime.
“The four foundations – Preference, Performance, Trend Cycle, and Differentiation – are important guidelines for small brands to execute and execute on a winning brand strategy,” he says. “The goal is to round all four bases and touch them all.”
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