With the British government expected to invoke Article 50 by the end of the month, Maru/edr’s technology research executive, Tyren Cooper, discusses the importance of customer insight in providing clarity to the uncertain world of the post-Brexit economy.
In the wake of the Brexit vote, consumer confidence has fallen. Now, more than ever, it is crucial to understand your customers and their spending intentions. Those who achieve this will undoubtedly gain a leading edge in the market.
Does anyone know what will happen?
It is hard to say with any certainty what the landscape of a post-Brexit future will look like because, for the UK, this is unchartered territory.
One of the central facets in the Brexit discussions has been our continued access to the single market and what this might mean for our economy if we opt-out. This uncertainty has eroded the confidence of the UK consumer and caused concern for retailers.
Following the news that the UK has voted to leave the EY, please indicate the strength of your opinion on the following statement.
I think it will have a negative impact on my spending of non-essential items.
Source: Retail Economics
As we move towards invoking Article 50, retailers are waiting for concrete outcomes from the negotiating table on which they can begin to build future strategy.
Following this, customer feeling – their beliefs, concerns and interpretation of their place within this shifting climate – should become the foundation on which you shape the future of your business. Through customer insight you can start to gauge a) how the customer interprets Brexit and how it will have a personal effect and b) how this will affect the customer’s new spend on retail items and services in the future.
The price of pants
Back in the 1970s, former chairman of the Federal Reserve, Alan Greenspan, added a little macro-economic wisdom on the situation by declaring that the sales of men’s underwear could be used as an indicator on the state of consumer spending. His case was that the last thing you’re going to do when you’re short on cash is go and replace your underwear.
The point – if a little outdated – still stands.
It won’t be the essential items – and here we’re talking the likes of food, household items and whitegoods – that consumers will sacrifice. In fact, Deloitte go as far as to report a “significant uplift” in essentials-spending during the run-up to Christmas 2016.
Instead, it is the luxury, ‘big ticket’ items that sit under the biggest cloud of doubt.
In a report published shortly after the vote, The Guardian cited Retail Economics, stating that: “more than a third of people [are] planning to cut back on large purchases such as holidays, televisions, bathrooms, and furniture.”
If you had to cut back on spending, which areas do you think you would cut back on the most?
Source: Retail Economics
However, through tailored customer feedback programs, and by tracking customer confidence, it is possible to tap into the intentions of your customers. By utilising targeted insight solutions, it is possible to ascertain whether they might still have the means and inclination to ‘go big’ with their latest home-technology product, designer fashionwear or holiday abroad – although pants, maybe not so much.
The outcome being that you have sufficient insight to create a competitive strategy and increase market share even if that market may potentially shrink in the wake of Brexit.
The question is: why sit in the dark and wait to see how the shopper will react in two years’ time? You can pre-empt their choices and tailor your marketing strategy by gauging the effect of Brexit now. This is an opportunity to effectively map out one of the most tumultuous periods of time in UK retail history.
Knowing customer intentions is important in any future marketing strategy, but implementing the investigation within this two-year negotiating period allows for a comparison of customer sentiment pre- and post-Brexit. Whether through tracking trends or investigation on a regular ad-hoc basis, the knowledge gained gives the power to assess how purchase intentions are affected over time as, inevitably, Brexit remains at the forefront of British public discourse.