Inflation is your once-in a generation opportunity: It’s time to grow in new directions
Inflation is the crucible in which brands gain share and develop long-lasting engagements with new generations, and this time around, it comes on a raft of changing values. After 30 years, inflation has reared its head, changing the perceived value of many products and services. Instead of looking at 2022 as a potential inflationary disaster, think of it as an opportunity to build long-lasting customer relationships based on emerging values.
The Consumer Price Index jumped 6.2% year over year in October. Consumers now weigh their spending and the value it produces for them, their families, and the world with a new inflation-flavored severity. If the 2020s were already shaping up as a pivotal decade before the pandemic disrupted life, supply chains, and the workplace, the climate crisis made a massive change in the economy inevitable.
How can your brand prosper, keeping customers as prices rise? It comes down to value, values and forging trusted relationships that endure. Build your path to inflation-era success on explicit promises backed by proof points in advertising, marketing and customer experience. Do this work in bad times because the winners will be even more profitable in the next business cycle. Whether the inflation of 2021 is short- or long-term, customers and employees are already on the move.
It’s all about value
During inflationary times, customers look for value but their values determine what counts. According to McKinsey, 40% of consumers, many the youngest and most affluent shoppers, have already jumped ship for companies that deliver a better way during the pandemic.
Inflation-driven changes are now visible as value and values diverge, which demonstrates the power of personal preference. For example, ease of access to goods and prepared food has defined success in 2021. Globally, food prices have soared by 30% over the last year, and, according to the U.S. Department of Agriculture, the U.S. has seen food-at-home prices jump a relatively mild 2.5% while dine-in and take-out foods are up 3.6%. Yet Walmart reported its biggest food sales quarter in six years during Q3, 2021. And as of May UberEats increased deliveries by 17% year-over-year.
Walmart’s historic low-price pitch has come back into vogue, but it is not alone, nor does price consistently win the day. Despite Amazon online revenue underperforming the competition, its Whole Foods store sales jumped 13% year-over-year in the third quarter. Whole Foods’ value proposition adds sustainability to staples; middle- and upper-income homes are willing to pay for food that is easier on the planet. UberEats’ growth is partly supported by tracking customer feedback about restaurants, packaging and drivers – the brand is probing preferences to shape itself to a wide range of consumers’ preferences.
The pandemic broke generations’ worth of confidence in the food supply and infrastructure. Consumers are also turning to home gardens in an echo of Depression Era “thrift gardens.” Not since the Y2K panic have seed sales reached current levels. These contradictory trends reflect a focus on value, including access to reliable sources of food. Walmart is grabbing market share with declarations that its shelves will be well-stocked during the holidays; meanwhile, consumers are planning to fill their own shelves with more homegrown produce.
The novel feature of this inflationary cycle is a concern about the economy’s impact on the planet. What the World Economic Forum calls the “global eco-wakening” is reshaping value calculations. Walmart and Whole Foods will gain on competitors at the low and high end of the market by emphasizing their reliable value proposition; their market share may reflect a red-blue divide, too, but they clearly represent different economic segments in search of their preferred deal.
Values define value
Just as Coca-Cola, Disney and General Motors powered through the Depression by focusing on their strengths, brands today can benefit mightily by sticking to their core values during inflationary pressures. Today, the difference is that digital media has amplified the power of values that define individual identity and priorities. Identity increasingly reflects the importance of shared values – tribes, families and friends exert more power because we are constantly connected to one another via digital platforms and media.
Values are a form of shared connection that grows through clear communication of a brand’s mission and what it stands for, backed by evidence. After all, Millennial and GenZ consumers have grown up with the instant ability to fact-check almost any claim. That access to information defines the challenge and opportunity in the 2020s.
Relationships are the sealed deal
Customer experience is the foundation of brand values, from discovery to fulfillment, and digital infrastructure knits those steps into an intimate relationship. During inflation, there’s more bad news to share – prices rise, some raw materials may be unavailable – and brands must constantly reinforce the values that cemented the customer relationship. The majority of consumers are increasingly sensitive to the environmental, political and social impacts of their spending.
GenZ and Millennials demand more disclosure and do more research, so the most transparent brands are winning, simply by expanding the scope of the customer conversation. Consumers respond to value but screen the cost of products and services through a values filter, and most of all they want to talk and be heard.
Now is the time to review and reinforce your customer value proposition. Take the time to analyze the values that bind customers to your brand and consider how to amplify them. Then, begin to build deeper relationships through digital and physical interactions that confirm the value, and values, your brand delivers.