Posts filed under ‘economic downturn’
The new era of consequences
Andrew Curry writes:
The shape of the post-recession consumer landscape is becoming clearer. Our latest wave of Henley Planning for Consumer Change [PCC] research, launched to clients at recent breakfast meetings, maps this. The headline is that risk is back on the agenda, and as a result, consumers have found ways of living with uncertainty; they are looking for greater control; and they are considering the consequences of their choices.
Some of these changes were already becoming visible before the recession. As our UK Managing Director Will Galgey pointed out, it has been an accelerator rather than a catalyst.
For our UK business, the launch represents a return to selling an annual trends report containing analysis and data, which we last did in 2001. We’ve been able to do this because of the expertise of some of our Chapel Hill colleagues – formerly Yankelovich – in managing published services.
Some of the data in PCC are familiar. Obviously financial worries are on the up. Confidence in corporations has fallen – the proportion agreeing that “I can trust the following [sectors] to be honest and fair” has fallen across all commercial sectors, with utilities falling even faster than banks. But the research suggests that people are less rattled by the recession than they were a year ago, even though the economy is weaker now than it was then.
This has had some costs. People now feel under more time pressure than at any time since the late ’90s, though not for exactly the same reasons. And people’s desire for more control isn’t matched by their ability to achieve more control in their lives.
The biggest impact seems to be on consumers’ willingness to make connections between their immediate surroundings and the wider world. 50% of the sample, of 2,500, thought it “very or fairly desirable” that “we won’t be able to consume as many goods and services as we have in the past”. 32% think it not at all or not very desirable, while 18% aren’t sure.
Similarly, nearly 60% now think we are at fault as individuals for environmental change – and around the same numbers think that it is both their responsibility to do something about it, and that doing something will make a difference.
From all of this, the Planning for Consumer Change data suggests strongly that new consumer values are emerging around vigilance, optimism, self-reliance, resourcefulness, connectedness, and prioritisation. This is a more complex world for brands to navigate, although the smart ones are doing it already. The good news, though, is that this offers more strategic options (and more interesting options) than a race to the bottom on price.
But as Director Henry Tucker observed at the breakfast sessions, “You’re probably not going to be able to sell the same old products to the same old consumers”. They’re expecting something from you which is more helpful – and demonstrates that you’re in tune with their new values.
For more information about accessing Planning for Consumer Change, please contact our UK Marketing and PR Manager, Jennifer Childs. The ‘era of consequences’ icon, seen at the top of the post, was designed by Tom Warren.
10 November 2009 at 11:48 am thenextwavefutures Leave a comment
Hiding out in the coffee wars
Alex Steer writes:
Starbucks hasn’t had it easy, at least for the past decade. But whether being attacked by Naomi Klein for alleged anti-competitiveness in No Logo in 2001, or more literally attacked by demonstrators during a rally in London in January, Starbucks has always toughed it out. Until the recession, that is.
In late 2008, McDonald’s set up a giant billboard outside Starbucks HQ in its home town of Seattle. Proclaiming that ‘Four Bucks Is Dumb’, it advertised McDonald’s new line of (less expensive) espresso coffees. It was a well-timed campaign, and to judge from its share price, Starbucks spent three months in shock.
Its new strategy, announced last week, suggests that the coffee giant still has the caffeine jitters. It has opened three new outlets in Seattle – without any Starbucks branding. 15th Ave. Coffee and Tea and its sisters look and feel like independents. The muted press release from Starbucks says that the unbranded stores offer ‘new opportunities for discovery, a high level of interaction and a deep connection to the local community’.
But these things – experience, interaction, community – are central to Starbucks’s brand. Hiding the brand suggests a company with an identity crisis. Perhaps Starbucks has been told that, in a recession, consumers retrench to the familiar and local. This may be true, but research from the US and elsewhere suggests that reports of a ‘bonfire of the brands’ are somewhat exaggerated.
The fuller story is that, for American consumers, price matters more. It’s no longer the poor relation to quality and convenience. But price isn’t everything. The brands that thrive in the downturn will be those that offer quality and experience at a fair price and give consumers what they want – for example, acting on the recessionary trend towards going out for breakfast, not dinner (good news for coffee houses).
So four bucks may not be bad – if they come with a little bit more of a bang. Starbucks needs to show its consumers that it understands this. But to build this trust, it needs to keep on being Starbucks.
The picture at the top is of Rob Brandt’s ‘Crushed Coffee Cup’ design, and is used with thanks.
Advertising or bust
Andrew Curry writes:
I’ve been watching quite a lot of ITV4 this month, because of its Tour de France coverage, which means I’ve seen a lot of the current ad for the VW Passat. It’s a curiosity for two reasons; first, it’s clearly been made, inexpensively, for the British market, rather than being a ‘Euro-ad’ with English voiceover, and second, because it has a clear ‘recession’ storyline. Man leaves large bank-type building with his work things in a cardboard box, which promptly sheds its contents onto the pavement, leading to a little cameo story along a closure-laden high street before (at last) he gets to his car, singing all the way (more than a nod to Morecambe and Wise) about the power of positive thinking.
There seems to be a sting in the tail; the cheery sheep, nodding along to the song through the bars of their truck are clearly on their way to the slaughterhouse. With the implication, of course, that our hero might also be on the way to the knacker’s yard.
Strongbow has also been having fun with the financial crash, and has buried a treat or two on the internet. You’ve probably caught their Henry V pastiche in which a Kenneth Branagh lookalike makes a rousing speech to the assembled tradesmen of England (gasfitters, dishfitters, etc). We recently came across a second version in which Henry’s gaze alights on a group of bankers – and he is lost for words. You can see here what happens next.
Avocados, ethics and supermarket histories
Alex Steer writes:
The avocado pear’s name is the product of selective memory. Our word for the South American vegetable comes originally from the Nahuatl word ahuacatl, which means ‘testicle’. This unfamiliar word was borrowed into Spanish, but mishearing and confusion with the easier-to-remember word for ‘advocate’ or ‘lawyer’, avocado, led to this being used for the pear. Avocado was borrowed into English in the late 17th century, and has stuck.
The avocado has in recent weeks found itself at the centre of a standoff between two supermarkets. Sainsbury’s and Marks and Spencer have launched TV adverts – commemorating their 140th and 125th anniversaries respectively – in which they each appear to take the credit for introducing the avocado to Britain. The avocado is now an advocate in supermarkets’ increasingly fierce battle for market share, but it is arguing the case for both sides.
There has been no shortage of ads harking back to the past recently – Sainsbury’s, M&S, Hovis, Persil – and no shortage of commentators noticing this. Most have identified that behind these campaigns lies a perceived yearning by consumers for the securities of nostalgia and tradition. Hovis’s strapline – ‘As good today as it’s always been’ – resonates with wary, recession-weary shoppers who are longing for a little sanity. Nostalgia brands are brands that have stayed the course; brands you can trust.
But Sainsbury’s and M&S are not just saying they are reliable retailers. They are saying they are responsible, ethical ones, and that they always were: employing women, helping the planet, doing their bit for the war effort. These campaigns are histories, written to appeal to the values and good citizenship modern consumers seek from brands.
The demand for corporate social responsibility is relatively new, and it’s hard for older brands not to look like they’re jumping on today’s bandwagon, compared to new brands who have built CSR into their blood and bone. By framing their histories in terms of modern values, retailers are telling consumers that, unlike the avocado, they were always advocates, representing quality and fairness. It remains to be seen if consumers will buy this, or conclude that it’s all a load of ahuacatls.
The picture at the top – a photograph of a painting – is borrowed, with thanks, from Betweenland on flickr.
Old and unimproved
Andy Stubbings writes:
Pessimism is an often underrated emotion. In this dismal economic climate, brands like Schweppes (with their series of woodcut style print ads that send up British political figures) and even the Evening Standard (with their “Sorry” bus and tube advertising) have sought to capitalise on consumer discontent and, most probably, a simmering resentment towards our political and economic institutions (for a wonderfully vitriolic example of this anger, see Matt Taibbi’s ‘The Big Takeover’).
However, no mainstream brands appear to have done this as explicitly as Shredded Wheat in the US. The “Progress is Overrated” print ad above is part of a campaign by cereal manufacturer Post to publicise the simple, unchanged origins of their product. As you would expect, the long-copy form and type-setting feel of the print ad are wantonly old-fashioned, conveying “back-to-basics” message (although the slapstick tone of other campaign media feels at odds with this). What is especially interesting about the copy, however, is that it namechecks waste concerns, resource shortages and the impact of climate change as evidence that we have not progressed (though curiously no mention of the financial crisis. The people who buy Shredded Wheat are mainstream American consumers, many of them mums buying for their kids. The tone of the campaign (by Ogilvy & Mather in New York) implies that research has found this attitude reasonably prevalent in the target audience, which suggests that consumer discontent may be quite widespread.
While it may be difficult for established brands like Schweppes and Shredded Wheat to reinvent themselves as the Voice of Discontent, I think there is a substantial opportunity for less well-known brands to take this on, in the way that Mountain Dew reinvented itself as the ‘slacker’ brand in the midst of the corporate greed of the 1980s. With so many brands offering similar messages of solidarity and empathy with consumers at the moment, it might be that pessimism proves a smarter and more distinctive position.
The picture is borrowed, with thanks, from Noise Between Stations.
Talking about Millennials and progress
Yannis Kavounis, the head of our Millenials Knowledge Venturing team, talks to Tom Ding
Tom: Yannis, I have been meaning to ask you about Millenials and the recession…
Yannis: Recession, anxiety, layoffs… I’m personally exhausted from all the speculation and debate around it. Let’s talk about something more uplifiting: change and our future.
Tom: Sure. But where will the change come from?
Yannis: Well, not from government and politicians. They are only trying to resolve the problem using the same tools and context that caused it. So what’s left? Us – ordinary people, and Millennials of course. Millennials are connected and aware of the power of the collective. They have the technological and creative tools to take risks. And most importantly they’re young, not jaded and realise that grassroots overhaul of our economy and values is the only way forward.
Tom: I have seen a few diffferent versions of Millennials and Generation Y, what is your definition?
Yannis: At The Futures Company we say Millennials are the cohort of people born between 1979 and 1992, or roughly those aged between 16 and 29 at the moment.
Tom: OK. So give me some examples of these new values you talk about…
Yannis: So, for instance, I love how some of us are still rooting for ownership (intellectual or physical) as a fundamental principle of our economy. Well, guess what, Millennials are teaching us that modern business models can be based on more fluid and open concepts such as access and open source. Think of a world where you don’t ‘own’ but you ‘share’ – as and when you need to. Who needs iTunes when you have Spotify?
Tom: Yes and everyone I know has started using Spotify all of a sudden. I read that they just got their millionth subscriber in the UK, around the same time that the billionth application was downloaded for the iPhone – which I guess is open development, if not true open source. But is all this generational change about technology?
Yannis: Well, hasn’t generational change always been about technology, through every stage of human evolution? The interesting thing about current technology is how Millennials are using it and the role it plays in their lives. For them, it’s the means to an end, not the end itself – it is the greatest facilitator of societal change at the moment. I see Millennials as the generation that will use technology to help us enter a new age of realisation … be that in the economy, consumerism, or through our social values.
The picture is borrowed, with thanks, from wearesuperfamous.com
(edit: The Futures Company definition of Millenials is those born from 1979 to 1992, not 1982 to 1992 as originally written – a typo, apologies)
Consumer responses to recession
Andrew Curry writes:
We recently launched our second report on changing consumer attitudes to recession – The Reconstructed Consumer. Henry Tucker and Chris Grantham presented to clients new UK data, collected in February, which suggests that consumers are coming out of the hangover stage of the spending boom and are starting to think consciously about how to reshape their behaviour.
In Feeling The Pinch, which we published last August, we found that consumers’ initial response to the recession was to buy things more cheaply rather than change shopping patterns. Now, falls in food and energy prices, and in interest rates, have eased some of the immediate pressure on household budgets – but pessimism has deepened about how long and deep economic recession will be.
Over half now think that things are “going very badly” for the UK economy (the other half merely think that things are gong badly). The data, perhaps unsurprisingly, show sharp declines in trust in banks, and also in CEOs and large organisations. Local independent organisations, in contrast, have seen gains in trust.
There are some interesting findings within the grain of the research, which goes into some detail at category level. One is that people’s attitudes to categories depends on how they classify it in terms of their ‘mental wallet’. We asked people to classify different expenditures by whether they thought of it as ‘Basic’, ‘Lifestyle‘, ‘Sanity’, or ‘Indulgence’. Spending gets trimmed at both ends: ‘basic’ and ‘indulgence’ expenditure gets cut back to pay for ‘lifestyle’ and ‘sanity’ spending. Of course, different consumers classify categories in different ways.
And consumers seem to be responding to brands which demonstrate confidence in the face of recession – in particular, the majority think that brands which have cut their prices were probably over-priced to start with. This seems to play better for those brands which were already at lower price points – witness McDonald’s positioning itself against Starbucks in the US with its “four bucks is dumb” campaign, or Tesco struggling to win over enough Aldi shoppers with its ‘Britain’s biggest discounter’ strategy.
The Reconstructed Consumer is available as a paid-for report. For more information please contact Jennifer Kivett on 020 7966 1824.
Recession 2.0
Giles Powdrill writes:
“A powerful global conversation has begun. Through the Internet, people are discovering and inventing new ways to share relevant knowledge with blinding speed. As a direct result, markets are getting smarter-and getting smarter faster than most companies.” So said the Cluetrain Manifesto almost exactly a decade ago. The prescience of the work lay in the authors’ clear understanding of the connective potential of the web and the shift in power from companies to individuals which would accompany its growth.
However, despite witnessing this shift in power, the majority of organisations still haven’t adapted their business practices to embrace the internet. They are not making use of the networks, the empowerment or the easy conversation and collaboration made possible through the social media technologies broadly described as ‘Web 2.0′ to help create new types of relationships with their customers. For many, the internet is still just another channel.
But maybe this is beginning to change: perhaps the current recession, the first of the truly digital age, will be looked back upon as being the spur to growth of new types of online commerce. We are already witnessing the growing success of online shopping, price comparison websites and digital advertising in the downturn, but these are only first steps – doing old things in a new way. The real challenge is about greater engagement; working with and for consumers in an open way. It is about companies demonstrating that they know enough about customers and their behaviours to deliver a benefit. Combining transparency with networked data and new technological infrastructure can create situations where all gain, customers and companies alike, but if companies don’t work out how to use these new networks, they may find themselves bypassed as people decide to do it for themselves instead.
A good example of a company getting it right is Zopa, the social lending site set up by banking professionals on which people lend directly to borrowers online. Borrowers bid for funds, and lenders choose whether to respond. Lenders get good returns, and borrowers get lower cost loans. Zopa makes its margin by charging both parties a fee. Default rates are low and lenders can see their borrowers and follow the progress of the their loan. Zopa has disintermediated the banking business by adding social networking and a human touch. In terms of Recession 2.0 it’s a sign of the times. As the Cluetrain Manifesto said: markets are conversations.
The picture, ‘the garden of Zopa’, is from a digital campaign by the social lending site to demonstrate the benefits of personal involvement and mutual help.
Most recent Henleymail now online
Jo Phillips writes:
The latest edition of HenleyMail (our free regular think piece email) is now available to read online here. There’s a chance to consider responses to the economic downturn in both the lead article by our UK managing director on how brands can adapt to a recession, and a perspective from Yankelovich in the United States on undermining the ‘fear factor’. There’s also an article on some of the work we have been doing on long-term futures – sharing some of the learnings and indeed the challenges that arise when we look to expand our strategic horizons in this way.
After over 60 issues, this is the last edition of HenleyMail – but only because we’re changing the name. As a result of our merger and rebrand, from now on the newsletter will be known as Futureproof. If you’d like to receive it you can sign up here.
The picture at the top of this post is ‘Hard Times’, by the 19th century painter Sir Hubert von Herkomer. From The Victorian Web.
Repairing the material world
Emily Pitts writes:
Demos’s recently launched ‘It’s a material world’ argues for the social value of heritage conservation, at a time when budgets for conservation courses are being slashed and the future of the discipline seems threatened. It calls for a national conservation strategy that includes education in schools, involves local communities in preserving the public realm, more support from government and a call to arms directed at professionals in the conservation and cultural sectors. If we don’t make the effort to be inclusive in how we look after the public realm, they argue, and make choices collectively about what to conserve, then social capital also declines.
An increasing interest in preserving social capital and a renewed vigour in community life is something we have been tracking for a little while, and early signs are that the economic downturn is increasing the extent to which we think of collective good. According to Yankelovich Monitor, 41% of American consumers define being a good citizen as ‘Not buying a home that is larger than you really need to help reduce energy usage’ compared to 34% just a year ago. Our data from the UK, whilst not directly comparable, hints at a similar sense of personal empowerment and responsibility, with the majority of consumers agreeing with the statement ‘I feel that I can make a difference to the world around me through the choices I take and the actions I make’. Interest in community life is also strong; according to our Planning for Consumer Change survey, since 2005 more people agree that the quality of life is better improved by looking after the interests of the community than those of the individual.
With changing attitudes towards community in evidence, the time might be right for the cultural sector, and conservation in particular, to push away from the individualistic outlook of the early ’00s and emerge in the schoolrooms and town halls of every community as a mainstay of our society. But is it possible for conservators to be more professional and more inclusive of the public at the same time, as Demos asks? Resolving conflict between public priorities and those of the experts could prove tricky, but rather than seeing these clashes of opinion as either/or tradeoffs, can we instead look to them as latent energy areas for future innovation?
The image is of the filming of the final of the BBC series ‘Restoration’ Village‘at the Weald and Downland Open Air Museum. More images can be found on their Flickr site.
22 December 2008 at 8:30 am thenextwavefutures Leave a comment
