In addition to following the health and economic impacts of COVID-19, we are considering the impacts to consumer behavior, specifically in the high-end home category. While this situation is unique, we have helped our clients weather some massive economic downturns from the post-9/11 economy in 2001 to the housing bubble burst of 2008. Below are just a few observations and insights based on more than three decades of growing leader brands through thick and thin, which includes coming out on the other side stronger and more resilient than ever.
Our advice – don’t panic. Luxury brands and high-end home products should take solace knowing we – the collective we – have been here before and take action based on anticipated trends. The economy will come back. We don’t know how long it will take, and there’s no doubt there will be a shakedown of losers and winners before we’re done. But based on what we’ve seen and experienced, below are some trends worth noting for premium brands in the home category. We’ll continue to monitor consumer sentiment and trend data and anticipate updating this as things develop.
Here’s what we’re seeing, so far:
We’ll continue to monitor and update this list. And, if at any point you want to talk through specific trends, challenges and opportunities facing your brands, we’re ready to listen. Contact us for a 30-minute consultation.
How to communicate with consumers in uncertain times.
Given the rapidly changing situation, knowing when and how to communicate with customers and prospects will not always be clear. That’s something we have to accept as marketers right now. Our counsel: strike a calm, authentic tone that communicates we’re in this together.
Apply common sense and maintain authenticity. Astute marketers will seek to understand consumer sentiment while recognizing it will likely be all over the board for the time being – largely depending on their worldview, their individual situation, or the latest news alert flashing across their screen. These issues may very well go beyond your target audience’s demographics. Also, what your voice of the customer data told you last month or even last week may not be true today in this developing situation. Monitoring consumer sentiment and really understanding the motives underlining your best customer’s behavior will be key and very likely could be changing as we speak.
Consider whether you truly have something useful to say. It is also important to remember consumers are currently inundated with messaging from their bank, tourism affinity programs and a variety of service providers – never mind the litany of confusing and quickly changing information about the severity of the virus and the appropriate actions to take. And at some point, if not already, they will reach saturation. Make sure what you have to communicate provides real value and matters to your customer base. This, too, requires understanding them.
Be smart but not insensitive. In the near term, we expect savvy affluent consumers with available cash to recognize this as a good time to scoop up deals on luxury products they’ve long been considering and even take advantage of low interest rates. And, by all means, we hope they do. Right now, more of that is what the economy needs, which will benefit the greater good. But, that doesn’t mean a luxury automobile dealer advertising “come on down, our parking lot is empty” (true story) amidst a national debate over whether to self-quarantine is the right thing to do.
This lesson is particularly important for all franchise brands. Your franchisees and independent retailers could use some guidance on messaging and promotion now more than ever. Consider this popular Maya Angelou quote, I may not remember what you said, but I remember how you made me feel. Same is true for brand communications and thereby retail promotions in a tumultuous time. Consider how your message will land with your customers. Your future sales could depend on it.
We’ve collected a few examples below of brands that seemed to get it right – at least at the time the email was sent. Again, things are changing quickly, so what may be timely today could be seen as insensitive and opportunistic tomorrow. We’ll continue to collect and share what we’re seeing. Perhaps this will help you as you consider your next move. We are after all in this together.
Read the full Food52 email here.
You’re a marketing professional living in an unprecedented society-changing crisis. And despite all that, you have a 30-minute presentation to the C-suite to lay out your best near-term marketing approach. Where do you even begin? Ramey has decades of experience marketing high-end home brands through cataclysms like 2001’s post-9/11 economy and the 2008 housing bust. Recognizing this is a rapidly developing situation, here’s where our heads are at this moment.
Promote your brand now to build loyalty for later. Companies that strategically invest in branding during recessions and even through prolonged depressions come out the other side much stronger than brands that cut back. Companies that go dark have a much longer, steeper climb to reclaim brand equity. Those that take the long view benefit from a less-crowded field, gaining a greater share of voice. Their dollar goes further, helping maintain brand relevance and value over the long haul.
Yes, we know this sounds self-serving from a marketing communications firm. But there’s data to back it up. In a 2019 Forbes article, case after case is made for brands that continued to invest or doubled down during a downturn, coming out on top afterward as category leaders with higher share and profit margins. Kellogg doubled its ad spend during the 1920s Great Depression while Post cut back, which led to Kellogg taking over and holding onto the category’s top spot for decades. Toyota surpassed Volkswagen as the top imported carmaker in the U.S. by 1976, after adhering to their marketing spend during the early 1970s energy crisis. A more recent big winner was Amazon, which grew sales a remarkable 28% during the “great recession” of 2009.
Consumers have short memories. Don’t let them forget you. Harvard Business Review conducted a yearlong study of 4,700 brands and concluded that those that selectively reduce costs by focusing on operational efficiency – while investing in the future by spending on marketing, R&D and new assets – come out ahead following a recession.
History also suggests that demand for luxury picks up quickly when the economy returns to strength due to pent-up demand by affluent buyers. High-end home purchases tend to mean a longer, more involved decision process. If you work to maintain the affluent market’s interest in your products, you start with a tailwind once things pick back up. But if you’ve chosen to go dark for some period of time, starting over means spending a lot more than your competitors who took the long view. Some predict the cost to regain share of voice once the economy turns may cost four or five times as much as your marketing budget cutbacks. When affluents begin spending again, your brand wants to be first in line for that pent-up demand.
Create lasting brand values that endear the brand to your best customers. You’d better believe affluent consumers are watching how corporate America responds, and the companies that show compassion and clearly demonstrate their brand values during this difficult period will be the winners. This is particularly true of affluent consumers. Read more about that here.
We are already seeing some companies step up, with others sure to follow. For instance, Louis Vuitton just announced that they’re going to halt perfume production and start making sanitizer. Pepsi, in partnership with Baylor and USDA, is getting meals to children out of school in rural markets. And in a brilliant move by swimwear startup Summersalt, the company is transforming its regular customer service channels into an opportunity to provide emotional support, recognizing this is a scary and lonely time for many as they retreat to their homes. Difficult times present unique opportunities for high-end home brands to demonstrate authentic brand values that connect with consumers on an emotional and authentic level.
Take the long view. The adage “crisis creates opportunity” applies today, whether that be in investment dollars or your brand marketing budget. Sure, spending cuts are inevitable. But don’t overreact. Use this opportunity to create lasting goodwill and identify opportunities to leverage company resources and brand positioning to be part of the solution. Consumers will reward you for it. Let us know if we can help.