Reading the mainstream news over the past year is enough to give any business heartburn. Will there be a recession? If so, how long will it last?
Retail and consumer goods companies are particularly concerned about the uncertainty surrounding today’s economy. After all, they are always the ones to feel it first. Even though the National Retail Federation expects US retail to grow in 2023, consumers are already starting to tighten their wallets.
What a Recession Means for Retail and Consumer Goods Companies
A recession presents a double-edged sword for retail and consumer goods companies. On one hand, retailers often witness decreased sales, excess inventory, and heightened price sensitivity among consumers. Consumer goods companies typically experience a shift in demand patterns, with consumers prioritizing essential purchases over discretionary ones.
But wherever there are challenges, there is also opportunity. By embracing first-party data and a consumer-centric approach, retail and consumer goods companies can adapt more quickly to changing market conditions and customer preferences, and ultimately emerge from a recession stronger and more resilient.
The First-Party Data Advantage
Unlike third-party data, which is widely accessible and shared among various entities, first-party data is unique to your business. That means you can use it to create more personalized interactions that no competitor can replicate.
When unified into a single customer view, first-party data offers a wealth of valuable insights about your customer base, including their behaviors, preferences, purchasing habits, and more. This in-depth understanding – paired with the tools to activate the data when and where it’s needed – enable retail and consumer goods companies to quickly adapt their marketing tactics, product offerings, and pricing in line with customer needs and economic realities.
Here's how first-party data can transform your strategy during a recession:
Personalize customer experiences: Access to unified, actionable first-party data enables you to create highly personalized experiences that resonate during challenging economic times. For instance, marketing and customer experience teams can proactively engage customers with tailored product recommendations based on their previous purchases and browsing patterns and provide exclusive offers that encourage them to buy.
Boost retention and re-engagement: Research show that acquiring a new customer can cost 5 to 7 times more than retaining an old one. First-party data enables you to identify at risk-customers that are showing a decline in purchasing activity and engagement, and then engage these segments with personalized offers and re-engagement campaigns. For example, marketing and e-commerce teams can offer exclusive discounts, early access to sales, or tailored product recommendations to rekindle the interest of at-risk customers.
Drive marketing efficiency: Efficiency is the name of the game during a recession. With first-party data, you can target your most promising customer segments, thereby reducing marketing waste and optimizing ad spend. For instance, the marketing team can segment and focus their efforts on loyal, high-value customers who are more likely to make repeat purchases, ensuring more consistent sales while bolstering customer retention at the same time.
Predict behavior: Retail and consumer goods companies can further optimize their marketing efficiency and ROI by leveraging their current and historical customer data for predictive purposes. By analyzing this data, you can forecast trends and anticipate future behavior. For example, you can apply machine learning models to the data to understand the probability of conversion and/or likelihood of performing certain actions. These insights can then be used to focus efforts on engaging individuals who have a higher probability of being receptive to your messages and offers.
Optimize inventory: During a recession, first-party data can offer critical insights into shifting consumer preferences. For instance, e-commerce teams can identify products with increasing or sustained demand, as well as those experiencing a decline. By using these insights to adjust inventory management strategies accordingly, retail and consumer goods companies can ensure products are available when customers need them, while minimizing the risk of overstocking or stockouts.
Adapt pricing strategies: By analyzing customer data, retail and consumer goods companies can identify which products or product categories are in higher demand and adjust pricing accordingly. This information enables teams to determine the most effective pricing strategies, whether it’s through discounting, bundling, or adjust price points. For example, marketing teams can pinpoint price-sensitive customer segments and tailor pricing or discount strategies to meet their expectations, enhancing affordability and value for customers during challenging economic times.
While the advantages of utilizing first-party data are evident, processing large quantities of customer data can seem overwhelming and time-consuming to most brands. But in times of economic uncertainty, retail and consumer goods companies can’t afford to wait. That’s where a customer data platform (CDP) like BlueConic comes in.
A CDP provides the technology and infrastructure to seamlessly collect, consolidate, and unify data from disparate systems and sources, ensuring a complete, accurate, and real-time customer view. Equally important, it also delivers that real-time data back to business users in marketing, ecommerce, analytics, etc. in a format that their tools can use to improve how they engage with customers. For instance, business users can quickly create finely-tuned customer segments that are crucial for personalization, re-engagement efforts, and efficient marketing – without relying on overburdened IT teams or costly external agencies. And since a CDP facilitates real-time data activation, users can respond faster to changing market conditions and customer behaviors. As a result, retail and consumer goods companies can not only adapt more quickly to the challenges posed by a recession, but also emerge from it as a more agile and customer-focused organization.
Your Path to Recession-Ready Retail Starts Here
For retail and consumer goods companies, being recession-ready is not a luxury but a necessity. By leveraging the power of first-party data and a CDP, you can not only survive, but thrive during a recession, retaining customer loyalty, optimizing costs, and delivering personalized experiences that resonate even in challenging economic times.
Request a demo of our platform today to find out how your business can remain resilient and drive growth no matter the economic climate.