How brands can win on value in a cost-of-living crisis

Consumers are under pressure like never before and the high street must fight hard for every pound spent. But businesses must be careful when conflating the price of goods with “value”, because customers are still willing to spend if the product is right, writes Jo Kent

Unless you’ve been hiding under a rock for the last two years, you’ll be all too familiar with the frequently referred to ‘cost-of-living crisis’ that has been dominating UK headlines and directly impacting consumer spending nationwide.

With costs skyrocketing across the board, from household goods through to mortgages and most recently rental prices – which are now taking up more of our gross earnings than any time in the last decade – consumer demand for value is shaping what we are buying.

But “value” has different meanings for each consumer and brands need to be able to demonstrate how their “value” to shoppers may go beyond simply offering low prices.

In the current environment, customers may trade down, or they may choose to splash out on premium products less often than they did before. It doesn’t mean they won’t stop buying completely, or only continue to spend if the price of goods is lower.

Take the cost of food as a good example. Everyone continues to eat during a cost-of-living crisis, but they may make different choices. Brands will need to be aware of who their consumer is and how they can carve out new business from shifts in habits.

UK-headquartered retailer M&S recently launched a series of adverts highlighting its premium Red Diamond Strawberries, with Tom Kerridge interviewing a farmer in Nottinghamshire on its selective sourcing of only the juiciest and tastiest of strawberries.

Some might see it as an odd choice to focus on premium products like Red Diamond Strawberries in a cost-of-living-crisis.

But it comes back to the consumer perception of value and treating each group differently.

M&S appears to be targeting a customer who is perhaps choosing to eat out less and opting to elevate their meals at home. They may think spending an extra quid or two on really tasty strawberries is a net cutback compared with a meal out.

Another area in which brands may want to expand their thinking on “value” can also be found in the socially responsible and ethically sourced space.

Before Covid-19 knocked the economy for six, sustainability had already grown to become a key purchasing factor for shoppers. Consumers shifted their eating habits in favour of plant-based or flexitarian diets, or towards brands that effectively communicated their green credentials.

Despite the cost-of-living crisis, data would suggest that a significant proportion of consumers have adopted these habits longer term and will continue paying a premium.

A great example is sustainable loo paper brand, Who Gives a Crap, that recently secured its first listing with Waitrose.  With 50% of its profits used to help support clean water and sanitation services in developing countries, the fast-growing brand has successfully developed a meaningful connection with consumers that delivers value in a different sense of the word.

The fact the business has found a market in Waitrose, would suggest that certain consumers continue to seek out ethical choices over other brands in the same price bracket that might make premiumisation claims of “comfort” or “softness”.

When times are tough, shoppers will shop smarter and nimble brands who can react smartly, will weather the economic storm better.

Suppliers and manufacturers may start to see light at the end of the tunnel sooner for those brands that can successfully tap into our insatiable demand for value – in all its forms.

And by taking the time to understand the target consumer and develop brand messaging that demonstrates the ‘value’ the product offers, whilst ensuring this flows through every single piece of brand related content, the chances of seeing that light becomes stronger each day.