By April 2022 few of us in the business world need reminding that the UK is experiencing its worst inflation in decades, or that wage stagnation and higher NI taxes are compounding the squeeze on disposable income for the UK consumer. Continued supply chain disruptions brought about by COVID-19 are now being exacerbated by the invasion of Ukraine. The impact of Brexit, seemingly on hold during the lockdowns, is rearing its head anew. If we believe the daily headlines, things will almost certainly get worse before they get better.
Of course, nothing impacts the fortunes of retailers like consumer spending, and with less disposable income available, brands are looking for larger slices of a smaller pie. While things like promotions and feelgood messaging will be the first resort, it’s increasingly clear these efforts alone no longer go far enough to make the kind of difference to consumers required to retain loyalty and maintain (or grow) consumer share of wallet.
In this paper we look at some of the views around inflation from across a range of qualified opinion holders – economists, bankers, government representatives, behavioural and social scientists, marketers, and of course consumers. Among a broad range of diverse and insightful opinions, what we largely found was a preponderance of ‘common practice’ based on decades of precedent, and not a lot of thinking about how this wave of inflation is different from others because of significant recent changes in consumer attitudes and expectations, and brands’ ability to meet them.
The short version of the findings is that brands who want to successfully weather this period of high inflation should be moving beyond the traditional promotions and messaging strategies and embracing Value-based Innovation that delivers meaningful, positive impact on consumers, the business and the brand. In the following report we’ll describe why this is, and also how brands can engage quickly to activate their own Value-based Innovations in the short term.