Permacrisis is forcing a mindset reboot for brands across the globe. As we face global inflationary pressures and the threat of private labels on brands continues to rise, the concept of permacrisis in the retail industry is becoming more relevant than ever. Exposed to shifting shopper sentiment in the face of a cost of living crisis in most of the Western world, brands with an omnichannel presence are particularly vulnerable as they battle competition, strive for consistency and try to offer value across all their retail touchpoints.
“Permacrisis” was Collins Dictionary’s Word of the Year in 2022. This “extended period of instability and insecurity, especially one resulting from a series of catastrophic events”, neatly describes the state of play in the retail industry today.
We’re living in a world in flux and manufacturers will need to become resilient.
Five impacts of permacrisis in the retail industry
Permacrisis is putting immense pressure on brands to compete and survive in a world of uncertainty:
- Record high inflation is prompting shoppers to change their spending habits,
- Consumer confidence is at a historical low, making loyalty and trust paramount but increasingly difficult to obtain,
- Omnichannel shopping means the customer journey is more fragmented, adding complexity that makes it difficult to understand and measure shopper success criteria,
- Mounting competition from private labels and challenger brands,
- Supply chain pressures fed by Covid, climate change, and labour shortages created added costs and put strain on fulfilment.
36% of FMCG sales in Europe are private label
69% of consumers have changed non-essential spending in the past six months
96% of consumers intend to adopt cost-saving behaviours over the next six months
Survival of the Fittest
2023 is the time to optimise omnichannel
Nearly 75% of buyers use multiple channels before purchasing, and 73% of e-commerce consumers report using various channels during their customer journey. Brands need to cultivate a seamless omnichannel experience, and more importantly, need to be available wherever and by whatever means the shopper wants to buy. Using multi location stock and price monitoring solutions will help to control your inventory in the face of supply chain issues.
Cultivate trust by owning shopper sentiment
Inflation remains a powerful factor in crushing shoppers’ spirits. Brands can be a force for good by telling consumers about the steps they are taking to minimize the impact of inflation and keep prices affordable. And it’s not just about price; offering value or quality will win shoppers, for example, savings on XL family packs or an emphasis on products that last a lifetime.
Emphasize sustainability and social responsibility
Consumers are increasingly conscious of the impact of their purchases, and they want to support brands that align with their values. By focusing on sustainable and socially responsible practices, brands can build a loyal customer base and differentiate themselves from competitors. Ensuring that your product content reflects these values is crucial to connecting with the conscientious shopper.
Own your data
Smart businesses are achieving all of the above and more by taking a data-driven approach at every part of the journey, from supply chain management to search optimization to digital self management. Brands that prioritize smart data gathering and analytics, and can respond to threat or opportunity at speed, stand the best chance of gaining a competitive advantage and thrive during permacrisis in the retail industry.
Permacrisis in the retail industry is today’s biggest threat to omnichannel brands. However, by being aware of shopper sentiment, creating a seamless omnichannel experience, and focusing on sustainability and social responsibility, brands can maintain their market share and even thrive in times of uncertainty.
This is the time to reimagine our business models and build a more resilient and sustainable future.