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Written by Stefan Van Rompaey
In this article
  • Companies DelhaizeEssentielWPP
  • Topics RetailDetail Day
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“What brand do you want to be after this crisis?”

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General20 September, 2022
Johan Hellemans (WPP) / Shutterstock.com

In times of crisis and inflation, brands and retailers easily resort to the blunt price weapon: the short term prevails. But that can have a pernicious impact on brand value: “Price in itself does not offer a competitive advantage.”

“It’s not just about price”

The optimism that prevailed early this year has quickly turned to fear, both among consumers and companies. However, purchasing power is well protected in Belgium. This crisis is not the same for everyone, says Johan Hellemans of WPP Belgium. “20 – 30 % of the population is in the danger zone, another 20 – 30 % is at risk of falling into it, but half of consumers do not really feel the crisis yet: they can live comfortably and do not change their buying behaviour.”

Yet companies are now quickly reverting to the price weapon. This is not without risk, according to Hellemans: “A segmented approach remains necessary. Look at Primark, for example: do people think this fashion discounter offers value for money? Often yes, but families with children do not think so… Parents are concerned about the quality of clothing. It is not just about price.”

Resolving tension

Some consumers are now going to buy cheaper products, or shop less frequently, but it is not enough just to look at short-term consumer behaviour: it is important to understand the underlying needs and motivations. “Why do people do this? What do they want to achieve? They want to maintain their lifestyle, but are now faced with constraints that make that impossible. So they need to adapt. How can companies resolve that consumer tension?”

Based on the underlying motivations, you can find leads, says Hellemans. “For certain people, the children always come first. They will do what they can to send their children to school with decent clothes and a filled lunch box. They will not skimp on that. If you know that, you can respond to it. For other people, the fear of becoming isolated – because they do not have enough money for a social life – plays a role. As a brand, you might try to increase the connection between those people.” And for people who can not make ends meet for essential purchases at the end of the month, brands come up with solutions like ‘pay later’.

Delhaize and Essentiel

Price is just one element in the marketing mix. “You have to fit it into the DNA of your brand. If you are not seen as a promotion-driven brand, and you suddenly start coming out strongly promotional, people are less accepting: that is not who you are. Delhaize now communicates strongly on price, with its Little Lions. That urge is understandable, but can the retailer claim that price domain? It may even undermine their value proposition in the longer term.”

For consumers, the purchase price is only one aspect. Price is also about the cost of maintenance, the repair costs, the resale value… “Essentiel Antwerp‘s recent initiative is interesting in that respect: the fashion brand opened its own second-hand shop RE-SSENTIEL. If you expect customers to downgrade, it is smart to take control of that second-hand channel yourself. Car brands are also embracing that model: they opened their own second-hand garages. That way, they also control the resale value themselves.”

Avoid a price war

Price in itself does not provide a competitive advantage: competitors can easily react. This then leads to a price war. So try to differentiate yourself on other factors: social values, sustainability… “A great example is Belgian fashion chain JBC, with the message that their clothes are well made and sustainable: people do not just have to throw them away, but can pass them on when the kids have grown out of them.”

In short: “Make the exercise: who do you want to be after the crisis? Make sure what you do now is compatible with who you want to be later. Look at ways other than price to communicate value. If you do that in a creative way, it will provide competitive advantage.”

Hellemans makes his statements based on the BrandAsset Valuator (BAV), a tool that measures brand value and allows for strategic advice with expertise in brand strategies and consumer insights. It is an initiative of GroupM, Wunderman Thompson, LDV and FamousGrey.

Strong cases at RetailDetail Day

How to get out of the crisis as a brand without too much collateral damage? Johan Hellemans of WPP outlines the opportunities and threats at the RetailDetail Day, on 22 September in Antwerp. The common thread that day: how to turn a retail apocalypse into a retail opportunity. With great retail cases from strong growth companies such as bicycle chain Lucien, Apple reseller Lab9, coffee chain Izy Coffee, last-mile specialist Andy, pet food shop Pharmapets and shopping centre Maasmechelen Village. Click the button below for more info and tickets.

Click here for info and tickets for the RetailDetail Day
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In times of crisis and inflation, brands and retailers easily resort to the blunt price weapon: the short term prevails. But that can have a pernicious impact on brand value: "Price in itself does not offer a competitive advantage."

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