Consumer confidence just got a boost. How can you capitalise on it?
The Reserve Bank’s decision to keep interest rates on hold is set to have a ripple effect throughout the economy.
While the smart money says rates probably won’t go down until well into the July-December half, very few people – if any – are predicting more rises.
Add to that news of pending tax cuts that will impact a large number of Australian taxpayers, and finally, the light at the end of the tunnel is showing.
It’s all good news. And lord knows we needed some.
Following a year of doom and gloom, optimism is finally the order of the day.
Even though none of us are any better off right now, the pause on rates means we’re not worse off. The news on tax cuts means we’ll be better off. And all of that will change the psyche of under-pressure consumers and the business sector.
The recent soft retail figures could signal a low point as consumer confidence starts to build once again.
So how can you make the most of this glass-half-full moment? What can you do, without getting ahead of yourself?
Look for the signs
Until they are bludgeoned into submission, most people are naturally optimists.
While the economic environment of constant rises in cost of living including incessant commentary about interest rates and persistently high inflation may have been enough to bludgeon some into the corner of pessimism, many have hung on. Some have continued to spend, albeit less conspicuously.
While we can’t expect that behaviour to switch overnight, all good retailers should now be on the lookout for signs of the tide truly turning.
This could include less worry about being seen to consume by those still with cash to burn; interest in new, replacement or perhaps upgraded models from the ones that have hung on; people spending squirrelled away cash because they think they are through the worst it; and a return to better and best brands in a category where some have traded down to ‘just good enough’ to help weather the storm.
Respond accordingly
Once we see the signs, we need to respond.
If we can help people happily consume more, trade up, and buy better more frequently, then margins can be returned to somewhere near ‘normal’ – a welcome outcome given they’ve been under the pump for a year or more at least.
All areas of the marketing mix need to be replanned to recognise this return to optimism.
No longer do we need to be dominated by the down-and-dirty ‘always on sale/price off’ tactics that many have used to ‘get through’ the last period. Instead, get ready to promote a mix of products including the more desirable/higher-margin items.
Use a tone in your communications that is less urgent and more aspirational.
Feed the lure of exclusivity to your database of ‘special customers’ – think VIP offers on more aspirational lines or early previews before the general market sees the product on the shelf.
Play to their desire to feel special and let their newfound optimism do the rest.
Keep the more urgent price-driven strategies to clear old stock. Replenish the marketing funds to sell higher margin lines to the glass-half-full crowd.
Tread carefully
But a word of warning, don’t get ahead of the customer’s mood.
Depending on what you’re selling, this turn in mood will impact differently. In all cases, it’s likely to be gradual – it won’t be like flicking a switch.
Use your data and your powers of observation to pick up on the turning tide.
Test the mood with some trial offers in the aspirational space to confirm your suspicion that the time is now right to ‘go bigger’.
Many times, if we wait for the official stats to confirm what we feel and see in our own business, our more agile and instinctive competitors will have already begun to steal share.
It’s a delicate balance to strike. Go too early and you risk pissing off your customers. Wait too long and you’ll miss the window.
To ride the wave of optimism, timing is everything if you want to catch it at its crest.
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