I recently found myself wondering why it seems like lately, there’s an explosion of organised floatation – groups of people lounging around sunning themselves, drinking, and socialising, all while perched atop inflatable lounge chairs, flamingos, or whales. It’s reached the point that I actually considered spending $99 on a giant golden inflatable swan – because it was as much of a must-have summer accessory as pair of thongs or a beach towel.
And then one day, while hovering over some gently lapping waves on my old inflatable frog, it came to me…..it’s just because we can’t afford a boat. Every person in that flotilla would love to be cruising around the Harbour, waving to people on ferries, pulling into secret beaches, and laying back on the sundeck with a cold beverage, but for most of us, it’s just not going to happen that way. The gold swan is a splurge I might be able to live with, and the floating is affordable fun, when buying a boat just isn’t in the cards. And even if it’s the ‘sunny weather, beach town, haven’t had a recession in 100 years’ version of it, it was a strong reminder to me of the consumer behaviour I saw in the US around 2008-2009 when the GFC took things by storm.
No one seems to know whether Australia is headed for recession, and trying to keep-up with this means more talk of bubbles than a tour at Peterson’s Champagne House. A recent Google search literally turned up two headlines from less than a month apart claiming “Risk of Recession is Waning” (AFR, 19 Nov 2015) and “Australia Headed for Recession” (SMH, 1 Dec 2015). From the average consumer’s point of view, that’s uncertainty enough to give pause.
Are Sydney-siders about to give up their morning flat whites and green pressed juices? – as if! But should we, and our clients, expect adjustments in behaviour if things start to noticeably slide – absolutely. And because no matter what a bunch of complex creatures The Bachelorette tries to make people out to be, there are a few fundamental recession behaviours that we humans just can’t help.
- “The Lipstick Effect”: In 2008, when everything else headed into decline, L’Oreal reported sales growth of over 5%. This was attributed to the “Lipstick Effect” – basically, women buying small but luxurious items that would make them feel good about themselves. It’s a fairly simple fact that when things seem bleak, people look for little ways to look and feel good. These small indulgences don’t break the bank and are the last to go when belts start to tighten. Beauty products are high on the list but it can extend to spirits, confectionary and anything else that can be classed as a little treat.
- Health in focus: During the GFC, consumers started thinking more about their health. Australians may already be health conscious, but a change in economic conditions means that health spend becomes about justifiable long term value. So while $100 at the gym and a daily acai bowl habit might get axed, one pair of shoes to enable months of running outdoors will make the cut. Most people don’t actually think they’re going to succumb during a recession, so they’re not willing to let their health take a hit with consequences for years to come.
- Entertaining at home/DIY: In a recession, the whole month turns into those last few days before payday – the ones where you seek out BYO restaurants, organise pot luck dinners with friends and stay in to watch Netflix because you can’t afford your usual $18 espresso martinis. If it goes on long enough, consumers get more creative about how they can eat, drink, and be merry without going out and spending a fortune – think the floaty example above, picnics, trivia nights, and home grown vegetable gardens.
The common thread in this is the mind’s need to provide logical justification for emotional decisions. This naturally occurs to a degree in all purchases, but is heightened when there is perceived uncertainty. Suddenly, everything is overtly being measured in cost per use or weighed up as a long term investment.
For clients to be ahead of the curve means laying the groundwork now to play up value, and not just low price. Whether that’s quality material, a tangible health benefit, long term re-sale value, or a feel good factor like making memories; sowing those seeds before the panic sets in is a healthy long term outlook. For example, when the GFC hit a brand like L’Oreal didn’t have to change who they were and what they offered. They continued to play a role that they had always played, and just made it more important.
For us media folk, it means working with our clients now to identify their Golden Swans, and ensuring that our strategies enable them to build equity which helps them to stay afloat, no matter what the bubble brings.