In just a week, the Australian stock market went from bad to worse, sending investors into a panic with its worst day since the 2007–08 Global Financial Crisis, followed up seven days later by the biggest one-day fall since 1987. With almost 30 percent of the value of shares wiped out in the first couple of weeks of March 2020, there’s no doubt in anyone’s minds that Australia is heading into a recession in the first half of 2020.
While earlier predictions had the economy heading towards a slump, particularly after the devastation of fire, flood and drought over the summer, this has been exacerbated by the coronavirus outbreak, which the World Health Organisation officially declared a pandemic on 12 March (Australia EST). Of course, Australia is not alone in the current economic mayhem. President Trump announced on 16 March that the United States may also be heading towards a recession.
In other words, these are unprecedented times, and retailers across the world will be hit the hardest.
Supply chains disrupted, resulting in limited stock, or no stock at all. Tourist numbers are down. Retailers are rapidly closing their doors—161 shops gone from one fortnight to the next. And now the widespread quarantines in Australia.
The news is bleak and you’d be forgiven for being worried about what this means for your business. We’re seeing the added stress in all of our clients. Despite the state of current affairs, you still have overheads. You still need to make sales.
So the question becomes, how will your business survive the incoming 2020 recession?
How businesses can survive a recession
While it may seem counterintuitive at a time when you instinctively want to tighten your belt, cutting or pausing all marketing spend is not the solution to a recession. In fact, quite the opposite—now is the time to maintain your budget and be smarter in your marketing tactics.
Research has shown that advertisers who maintain their ad spend during a recession actually increase sales and market share, both during the downturn and afterwards. This is due to a number of reasons, including:
- Less advertising competition as other businesses cut back
- Maximise on people's at home idle time
- Leverage off the increased time spent on mobile devices & social media
- Lower ad costs and a “buyer’s market” due to less competition
- Creating a stable business image during tough times
- Increasing your brand’s share in the consumer consciousness
However, that doesn’t mean you should keep your marketing strategy exactly the same. Vital adjustments must still be made for the economic and social context that your consumers are facing.
For example, as the coronavirus spreads, we’re likely to see an accelerated shift from store purchases to e-commerce. Already, an unprecedented number of Australians are working from home, including employees from major companies such as Telstra, ASX, Vodafone, JC Decaux and Foxtel. As this type of self-isolation increases, more people will shop online and be browsing during times when they’re not typically active.
So while your foot traffic may be down, smart retailers will direct their marketing efforts towards winning those online conversions, a tactic that we’re already seeing work.
How to thrive in a recession
While many retailers have suffered in recent months, there are some who have defied the trend and actually thrived in the current environment—H&M and JB Hi-Fi among them. Their success lies in their strong understanding of their customer and relevant marketing tactics, according to the Australian Retail Association executive director.
“It comes down to understanding your customer, getting all your sales avenues right, and building a business that is clear and identifiable,” said Russell Zimmerman.
“If you’ve got a bricks-and-mortar business that’s tied back into an online business, which is then tied into your social media, if you’ve got all of those things right, then you’ve probably got the recipe for getting things right.”
At 500, we’ve also seen our clients increase their sales in times of low consumer spending through strategic video marketing.
It’s no secret that consumer spending on non-essential or big-ticket items is often affected by federal elections. However, that didn’t stop our client, Sunboost, from becoming the largest solar energy provider in Australia in only six months during the 2019 Federal Election period.
With the help of 500’s creative and strategic video marketing expertise, Sunboost was able to remain proactive and highly responsive in a reactive market, capitalising on marketing opportunities as they arose.
Recession-proof marketing ideas
While understanding your target market and how their behaviours are changing will influence what direction your messaging takes during a recession or other crisis, there is some general advice you can follow.
Creating a multi-channel brand is critical for increasing e-commerce sales as online customers expect a seamless experience between a brand’s multiple platforms.
The Harvard Business Review also recommends the following marketing strategies during a recession:
- Focus on family values and imagery that comforts as many will spend more time at home, though still connecting with family and friends.
- Adjust your product portfolio to prioritise multi-purpose items and unbundled services and products—highlight reliability, durability, safety and performance.
- Adjust your pricing tactics—temporary price promotions, lower thresholds for quantity discounts and extended credit will do better than sweepstake competitions.
- Capitalise on people being home - with people having more idle time working from home, they are more available to research and consider purchases while overcoming what may be ‘boredom’ while doing some online ‘retail therapy’.
With the recession predicted for this half of 2020, now’s the time to create a recession-proof business through savvy marketing tactics. Learn more about how 500 has helped other businesses through economic downturns in the past and book a strategy session to find out how we can help boost your sales with our strategic social media video marketing expertise.
500 Digital Media is a Melbourne-based production studio with a national focus. Fluent in every stage of production – from concept and creation to social media strategy – we provide a full-scale and integrated end-to-end service delivered by our team of in-house experts.