This is an excerpt from our latest ebook “Brand-building during a downturn: How merchants grow loyalty in a recession” by Ryder E-commerce by Whiplash partner Toolio, a best-in-class planning platform built to help the next generation of retailers.
During any economic downturn, it’s important to make sure you are staying true to your brand. This includes ensuring your brand represents its core values across all marketing and sales channels and not stepping out of the typical narrative that customers have come to know and trust.
The goal during any recession should be to remind customers that they can count on your brand (just like they always have) while being conscious of budgets and effectiveness. Conservative spending starts in the planning process, which is why top-down and bottom-up planning is crucial.
When doing bottom-up line planning, it’s important to consider what your company stands for and how your customer expects to receive that message. Is there a cohesive assortment that you’re offering to the customer, and do all the visuals make sense together? Are you telling a good story with your assortment, or have you over-assorted?
Over-assortment is a common problem and can lead to a lot of inventory issues. This is because customers are viewing a variety of similar items but in the end, are only going to choose one. This ends up splitting sales and creating excess inventory. Keeping your assortment tight is really important for your brand. As long as you remain committed to your core values, your customers will remain loyal to you.
During a recession, brands must make sure they are managing inventory at a total level. From a top-down standpoint, planning conservatively while making sure your inventory appears fresh is of the utmost importance. Freshness is what drives loyal customers time to return to the brand again and again. Brands should consider rolling out smaller capsule collections and ordering shallower depths to maintain freshness and make sure the customer stays engaged.
Ordering smaller quantities may feel uncomfortable at first, especially since the COVID-19 pandemic has made everyone aware of missed sales due to a lack of inventory. But keeping the customer engaged with new products while trying to work through the inventory you own is crucial to success during a recession.
One must be very mindful of what inventory is on hand. Be realistic with your sales and receipts planning. Remember you are protecting yourself and your customer. Uncertain economic times are not the time to experiment; you must balance keeping customers excited while limiting costs to the brand.
Lastly, be mindful of pricing. This can be a very slippery slope. Don’t discount your products too much or too frequently, because it’ll risk training consumers to buy only when things are discounted. We encourage brands during this time to give consumers other reasons to buy. This is where adding more launches in smaller capsule collections comes into play. Make sure you plan for having the right products at the right place at the right time. Coupled with the right price point, this is a recipe for success.
Just remember, scarcity is not a bad thing as long as you balance it well. Having things sell out means you have a great product that is in high demand.
Enjoyed this excerpt? Check out the rest of our ebook on how e-commerce brands and retailers can future-proof their success against downturns in the economic landscape: