It’s tough out there for many retailers – you don’t need me to tell you that. There’s enough written about inflationary pressures, consumer uncertainty, and increasing competition that if you’re not feeling the pinch, you should feel privileged. Retail trade figures are still steady if not slightly growing at the overall level. Yet it’s hard to separate these figures from inflation, the growth of ultra discounters like Temu and Shein, and the fact that a lot of sales now are coming at heavy discounts, thanks to mega-sales like Black Friday, Cyber Monday, Afterpay Day and so on. Unfortunately, the combination of these challenges has proved too much for some retailers. In Australia, we’ve seen companies like Godfreys and Beaurepaires go under in recent months, while the trend of retailers downsizing or closing stores continues on a global scale. The natural question all of this spurs is ‘What can we do about it?’ How can retailers weather these storms, or even ride the waves forward to success? The bad news is there’s no easy answer; if there were one, everyone would be doing it. But the silver lining to this proverbial cloud is that we have much evidence about how consumers act during, and even after, downturns like this, AND what retailers can do about it. Admittedly, we’ve not seen many examples of retailers recovering from an international pandemic forcing (shall I say ‘unprecedented’ again?) store closures, but we do have some general things we can learn from research on past economic downturns that point to considerations for retailers today. It would be great if broader environmental factors like inflation and cost of living made things easier on consumers soon, but what should retailers do in the meantime? Let me summarise a few big themes here.1. Learn about how consumer behaviour really changesIt’s tempting to make assumptions about how consumer behaviour changes during tough economic times. Sometimes, intuition may be right, but we now have substantial research to draw on to either back up or reject these assumptions. A lot is what you’d expect: consumers get more price-conscious and reduce some discretionary spending while increasing attention on generic or private-label products. At the same time, we see the famous lipstick effect, with consumers still looking for occasional affordable luxuries. So while consumers do look to decrease spending in certain areas, it’s not universal and some affordable luxuries are still on the cards. What’s particularly interesting in these dynamics is it’s not just what consumers buy, it’s the changes in how they shop. One academic study1 tracked a group of European consumers over four years, involving multiple periods of recession and recovery. The study found that consumers used recessions as times for consumption ‘learning journeys’, adapting their behaviour in ways like planning shopping in advance, shopping more frequently, reducing pre-stocking behaviours, and turning to waste reduction to reduce spending. The message here then is not to just assume what consumers will do during these tough times. Instead, talk to them, observe them ethically, and learn about what kind of changes they may be undertaking and how you can adapt to them. This might even present opportunities for your brand to fit into these new consumer behaviours. 2. Don’t stop marketing, and even consider new launchesAnother natural tendency during tough times is to look at expenses like advertising and new product development and see where you might make cuts. On one level it makes sense, why push new products or campaigns when people are struggling to afford existing ones? Well, research shows that cutting development and marketing during recessions can be damaging, and even launching new products during recessions can be beneficial in some settings. A large-scale empirical study2 examined nearly 10,000 different new product launches across the UK and US and the FMCG and automotive sectors. Using pretty advanced modelling techniques with lots of controls and long equations, the authors found that products launched during recessions tend to survive longer than those launched during normal times. These findings apply across a variety of sub-categories, and there are even stronger effects for high-impulse or high-involvement products. So does this mean every retailer should start launching a bunch of products? Definitely not. All it means is to think before cutting marketing or new developments, as your efforts now may actually set you up for future success if you can sustain them. 3. As always, look to value, not just priceThe final consideration I’ll leave you with is a common theme I’ve written about many times before: focusing on value and not just price. Naturally, we’re focusing on price a lot as consumers look to stretch their shrinking budgets further. There’s a temptation to look at broad price discounts to attract price-conscious shoppers, which we’re seeing with the popularity of mega-sales like Black Friday and Cyber Monday. Yet as Dr Jessica Pallant and I wrote recently, doing this might work in the short term, but comes at a heavy cost of lost margin, and training consumers to buy things only on sale. Instead, we’re seeing smart retailers look to ‘value’ to appeal to consumers. Tactics like unique product bundles, exclusive ranges, premium add-on services, or even loyalty bonuses can all add value to the equation while helping brands maintain profitability. While the appropriate strategy will depend on the brand and the customer’s situation, the idea is consistent; rather than dropping your price automatically, look for ways to make the price worth it.By suggesting these themes, I’m merely trying to spark ideas and conversations about the ways retailers can survive, and maybe even thrive, throughout the current and possibly future economic challenges. While some of the causes of this round may have been unprecedented, there’s a lot we can learn from past downturns and their impacts. Admittedly, it’s easy for me as a researcher/academic to say what retailers should consider, and much harder for retailers to put them into action. I’m not claiming to have the answers, or even that there necessarily are any easy ones. All I want is to get you thinking creatively about different ways to approach the challenging times we’re in, in hopes we can get through it together. 1 ‘Consumption dynamics during recession and recovery: A learning journey’”in the Journal of Retailing and Consumer Services, led by Maria Sarmento.2 “Why and when to launch new products during a recession: An empirical investigation of the U.K. FMCG industry and the U.S. automobile industry”. Journal of the Academy of Marketing Science, led by M. Berk Talay.