Consumer behaviour is constantly evolving. Concerned about the cost of living crisis and the current state of the macroeconomic climate, consumers are opting for more versatile products that are good value for money, seeking a seamless online and in-store experience, and often spending money to save money further down the line. Now more than ever, brands need to step up and meet these expectations.
Retailers are clearly feeling the impact of rising inflation rates and increased supply chain costs, with many passing these costs on to the customer. According to The Telegraph, retailer Moss Bros, sportswear retailer Mountain Warehouse, and online retailer The Hut Group (which owns eight brands across skincare, haircare, and cosmetics), have introduced fees for customers returning purchased products. Zara has also recently followed suit. It will be interesting to see if these decisions have an impact on sales, or whether consumers will keep coming back.
So, what expectations do consumers have during the cost of living crisis, and how should businesses react?
Demand for brand transparency
Transparency isn’t something brands can just take or leave. If it uses all-natural, organic ingredients in its skincare products, we want proof. If a brand is committing to environmental business practices, we want to know what they are doing and to understand the impact. This might seem like a challenge for smaller brands, but it could actually be more straightforward than for large organisations – especially if it sources locally and has a simple supply chain.
In its article on transparency, Forbes outlined the simple steps businesses can take to increase transparency for consumers, which includes disseminating information in the right way and building a strategy to improve over time.
Emphasis on circularity
Deloitte found that 38% of consumers paid higher prices for products that were longer lasting and more durable in 2022. This investment in higher-quality products and awareness of the larger resale ecosystem has led many brands to launch their own resale platforms. H&M has recently expanded its resale platform, H&M Pre-Loved, to the US. Gucci also recently launched its new deadstock and resale platform as part of its circularity efforts.
The launch of resale platforms in-house also helps brands maintain transparency over pricing – which it has little say over if items are being resold on multiple third-party sites. A step they are taking to satisfy consumers, but also to regain some control.
Due to the cost of living crisis, brands are under pressure to keep cost-conscious consumers happy, without negatively impacting revenue. This, coupled with a need to clear out excess stock or unsold inventory, has seen various dynamic-pricing models put in place.
Dynamic pricing allows brands to take advantage of season sale, peak, and end-of-season pricing. In contrast to static pricing (used by restaurants and manufacturers), dynamic pricing allows businesses to shift prices up or down in line with changing demand. Airlines are a perfect example of dynamic pricing in action, gathering frequent flyer data and monitoring your behaviour online, using it to pitch its fare to you.
McKinsey published an article on the do’s and don’ts of dynamic pricing in retail. It highlights that paying attention to consumer expectations is a must, and then pricing products accordingly. For example, in fashion it would be expected for the price of on-trend items to fluctuate from week to week depending on demand, but the price of staples or every day items to stay the same. Retail wire has predicted that digital price stickers that update in real time will become more common, something that would be welcomed in an era of intentional and well-researched consumption.
Demand for versatility
Consumers are seeking products which will serve them in more ways than one. Naturally, the price of an expensive product will seem more palatable if it has multiple benefits. Brands within the beauty industry are a great example of this, from creating multi-use haircare treatments, to makeup that doubles as skincare.
Businesses have a lot to consider in keeping up with consumer expectations. The key things to consider are to back up any claims around environmental business practices with proof, clearly communicate product ingredients and ideally support claims with research, as well as adopting a fair pricing model that meets consumer expectations without negatively impacting the bottom line