Recession implies to a considerable decline in economic activity spread across the economy, which lasts more than a couple of months. As Kavan Choksi Wealth Advisor says, the signs of recession include rising asset prices, tightening monetary policy and a flattening yield curve. During a recession, it is common for consumers to cut down spending on luxury goods, accessories, electronics, furniture and home products, as they prefer to spend their money on basics like groceries and medicines.
Kavan Choksi Wealth Advisor provides tips that can help retailers to stay competitive in a recession
The retail sector is closely tied to consumer spending and hence is particularly sensitive to economic downturns. Recessions can have significant impacts on retailers due to changes in consumer behavior, purchasing power, and overall economic conditions. However, with adequate flexibility and preparation, a recession can provide retailers with the opportunity to improve productivity and customer loyalty, as well as strengthen their market position.
Here are a few tips that can help retailers to stay competitive in a recession:
- Be customer centric: Understanding customer preferences and concerns is important for retailers to survive and thrive during a recession. Very often retailers implement loyalty programs and promotions to build customer loyalty amidst economic downturns. However, these programs may incur high costs and not deliver adequate results unless they are designed to meet the needs of the customers. Hence, retailers need to invest in customer research, develop customer-centric loyalty programs and effectively try to cater to their needs.
- Create an experience: Exploring ways to engage with the customers becomes more important than ever in a recession. Today many customers expect personalized services from brands. In fact, many of them may move to the store of a competitor if they do not have a satisfactory experience at a certain retail establishment. Providing a good customer experience doesn’t have to be too complicated or costly. Simple things like providing customers with a cold glass of water on a hot summer day can go a long way.
- Rethink marketing: Many retailers are quick to cut their marketing budgets during a recession. However, it is important to understand that recessions can be an opportunity to build brand recognition. In the competitive, digital centric world of today, investing in digital marketing strategies like social media campaigns, email marketing, and search engine optimization can be a good idea for retailers. Retailers can leverage digital channels to communicate promotions, discounts, and value propositions.
- Follow competitive pricing strategies: Price sensitivity tends to go up during recessions. Retailers should carefully consider their pricing strategies in order to remain competitive. Providing competitive prices and value bundles can help attract cost-conscious consumers.
As Kavan Choksi Wealth Advisor mentions, recessions also provide retailers with the chance to opportunity to identify and reduce bad costs. They must analyze their business operations, and check if they have over hired, or if a contract needs to be renegotiated, and so on. By cutting down expenses, retailers would be in a better position to weather reduced profits and use savings to reinvest in their business. For retailers, recessions should be the time to focus on efficiency rather than making large investments in innovation and growth.
