Guest Contributor | Jan 17, 2023 | 0
The coming consumer austerity and brands
The ability to consume is a form of happiness, an ongoing, year-round Christmas that is equal parts anticipation and gleeful spending. In essence the consumer has wants, and uses the purchase to fill the gap. A new piece of gadgetry can bring a sudden sense of elation for instance if unhappiness is caused by something else. It is psychologically unhealthy, but retail therapy boosts profits.
In the past few decades, the global economy has been built on consumption, and has become dependent on it. When the recent crises broke and consumption slowed, investors shifted their search for growth to emerging markets in attempts to sustain short-term growth.
The spin-off was the need to develop emerging markets, and there is some form of obvious impact. The fact that there are now more mobile devices than toilets in emerging markets points to this. Evidently, development process can be subverted in the interest of yields on equity.
The new UN report on climate change however points to a spanner in the coming works. Sustainability is an old thread, but worth examining again. In essence, energy needed for rampant consumption is ruining the environment and making quality of life tenuous.
The scientists have finally emerged from their timid shells and stated that emissions have to be substantially reduced or stopped altogether. The reality of the matter is that either consumption has to be curtailed or emission-free methods of productivity have to be implemented.
If you go with the latter, then the obvious result is that there has to be a substantial investment in new means to generate energy. This is a vast expense on a global scale, which will be passed on to consumers. The end effect is that there will be less consumption anyway, and brands will be less profitable.
Think of it as a coming consumer austerity. It won’t be instant. As demand waned in highly developed markets, shifts began to happen. These shifts were delayed, and the lifestyles of emerging markets are still not in parity, so there is room for growth in the realm of consumer brands.
However as the environmental expense of industrial activity mounts, alongside the national costs of adapting to climate change, consumers will begin looking for durability and duration to offset the expense of acquisition. In other words the pleasure of novelty may not be a sales driver, and brands will be expected to last longer. Retail therapy will become far more expensive.
In this austere sales climate, the inevitable though superficial choice will be to reduce communication expenses. This will be disastrous, as sales can be index linked to communication. The relationship is almost direct. It is inevitable though, but the experience will be a lesson for business.
The productivity of communication will also take a hit, as consumers become impervious to the lure of retail therapy based on their individual budgets. However the psychological gaps that are filled by purchasing behaviour will still exist, and will still need to be filled. Brands can latch onto this, and already do in their communication tactics. A scan of major brand pages on social media shows that brand communication is increasingly shifting away from direct product messages and using media to validate consumers, their lifestyles and fulfill their wants, with some product exposure when needed. So brands can still fill gaps in wants, provided the brand manager knows when the appropriate time is, and how, to make the conversion from a follower to a purchaser. Sustainability, and the costs that have to be passed on to consumers create a difficult and hazy path ahead, but the ultimatum has once again been given. There may however be development spin-offs from all of this as consumers consider the relative merits of extending the life of a mobile device in favour of the expense of a toilet.