Learning how to maneuver through tough economic times will likely be a new lesson for many CEOs. Inflation hitting 40+ year highs means that many of today’s business leaders were still in elementary school when the US last experienced rampant inflation. However, there is always a silver lining, even in the face of record-breaking doom and gloom. The very best companies and leaders know that challenging economic times can yield tremendous future returns.
When the going gets tough…the tough figure out how to take market share from their competitors. As Warren Buffet has famously said, “only when the tide goes out do you discover who’s been swimming naked.” For the past several years when the markets were flush with money, it wasn’t too difficult to look brilliant because of strong sales and profits. The pandemic-fueled e-commerce boom followed by supply chain shortages buoyed many retailers’ and brands’ bottom lines, but not necessarily because those companies were financial geniuses. The stakes are much different in a rapidly contracting global economy. Today, retailers and brands need to stay focused on doing what they do best. New markets may be harder to create but gaining market share may prove to be the winning growth strategy for companies that are truly excellent at what they do.
One of the best classic business books is Jim Collins’ From Good to Great. In it, he puts forth the Hedgehog Concept, based on a Greek parable, which says, “the fox may be very good at many things, but the hedgehog is excellent at one thing.” He uses this tale to drive home the point that the very best companies and leaders focus on the sweet spot that lives at the intersection of what they are passionate about, what they can be the best at in the world, and what drives their economic engine. The clarity for Hedgehogs is in sticking to the one thing they are the very best at doing—not simply good at. That tenacity can make the difference between a black or red bottom line in difficult economic times.
Data driven decision making with voice of customer (VOC) software maximizes profitable results. Applying various methods of predictive analytics, such as machine learning, predictive modeling, or data harvesting to historical data can give brands the momentum required to leap from merely competent to excellent.
What kind of data helps companies win during economic uncertainty?
In a recent First Insight report on the effect inflation is having on consumer confidence, consumers indicated that they would be purchasing less expensive grocery items to cope with rising food prices. Listening to the voice of the customer helps brands develop strategies that set them apart in the market. Using this data along with predictive analytics could help Grocer A take market share from Grocer B with a private label program offering a proprietary alternative to their consumers’ favorite name brands.
Testing marketing messaging to make sure it’s being heard can serve as an ally for brands in their quest for greater market share. If Brand A has a more sustainable product in the market than Brand B, leveraging that sustainability messaging in all communications outreach can be a key differentiator to their business. In a recent sustainability report, First Insight found that sustainability is more important than brand name across all generations. Moreover, all generations indicated that they would spend more for sustainable products. Putting this knowledge to work can create an enormous competitive advantage during a contracting market. Understanding how that message resonates with consumers, then refining it for greater impact before deployment, guarantees broader engagement with the brand’s value proposition.
Retailers and brands that offer the right merchandise assortment have better bottom lines. First Insight’s powerful retail pricing predictive analytics and assortment optimization tools reduce markdowns, improve margins, and eliminate dead stock to maximize consumer reach and eliminate low value product before it’s produced. Why waste manpower, production, shipping, and marketing costs on products that no one wants in the first place?
Even the very best leaders cannot successfully navigate the grim realities of “never seen before” economic conditions without the support of a toolbox of tech-enabled solutions.
By digging deeper with data, using predictive analytics, and testing before deploying will give brands and retailers the competitive advantage they need to grow and thrive in a down market.
