VIEWPOINT
THINK YOUR BRAND IS RECESSION-PROOF? THINK AGAIN.
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While certain FMCG categories might feel ‘recession-proof' - whether that’s pets, parenting or personal care - this isn’t necessarily the case. All sorts of brands are going to feel the pressure as consumers prioritise budgets over convenience this winter - even when it comes to nappies and dog food.
BY PETE MARTIN, MD AT DIGITAL COMMERCE AGENCY SMP
In particular, direct commerce innovations that took off during the pandemic, such as rapid delivery, are set to be scaled back as consumers try to save money. Getir’s advanced talks to acquire Gorillas is a strong sign that the home delivery boom might be slowing down.
Consumer confidence has hit record lows and households’ weekly spending power has decreased by £30 year-on-year. While ‘essentials’ labels across FMCG categories have historically made the incumbent grocery brands more resilient to disruption than other categories, FMCG as a whole is still at risk.
Any business, even in a supposedly ‘safe’ category, would be short- sighted to assume it can navigate the cost-of-living crisis without a shift in strategy.
FRESH CONSIDERATIONS FOR A NEW RECESSION Shopping behaviours have diversified at scale since the last recession in 2008. Social media was in its infancy and we were on the edge of the e-commerce boom. Sixteen years on, the market looks very different, which has been to the benefit of the direct commerce sector.
Notably, subscriptions and rapid grocery delivery have come to play a core role in what many FMCG brands offer, and in dictating what consumers choose - or choose not - to spend their money on. However, each of these examples would constitute a luxury option, which may not sit well during a downturn.
Tat said, many direct commerce businesses became adept at pivoting during Covid, so should be better prepared to adjust their offer and supply chain in the coming recession.
Te smart recession-proof brands will now be paying close attention to the eCommerce landscape as a whole, while monitoring what customers are buying from them and how their shopping habits
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homeofdirectcommerce.com | Direct Commerce
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