The world has been experiencing economic turmoil for the past couple of years, and the local economy has not entirely regained its footing after the pandemic severely impacted several industries. Recent developments such as the United States recession and the Russian war in Ukraine have compounded these concerns. However, this does not mean that your business needs to close shop because it’s going through a rough patch financially. There are ways you can survive a recession and come out stronger than ever before!
What is a recession?
A recession is a period of economic decline that lasts more than two months and in which unemployment increases. It’s also known as a “recessionary period.”
The official definition of a recession from the National Bureau of Economic Research (NBER) in the U.S includes two criteria:
A decline in economic activity spread across the economy, lasting more than two consecutive quarters; and
A significant decrease in real GDP (Gross Domestic Product).
What does a recession mean for retailers and business owners?
A recession affects the values and behaviors of consumers, as well as international trade policies. For example, if you’re running a retail store, it might be hard to sell products if there’s less disposable income available in your customer base—or maybe people are feeling more cautious about buying things they don’t absolutely need because they want to save money for other things like education or health care expenses.
What does this mean for your business? Well—it depends on how you’re doing during better times! If your company has been struggling lately but still manages to stay afloat during tough times, chances are it’ll also survive during recessionary periods without much trouble! However, if there’s not much demand for what you’re selling right now (and no chance that will change anytime soon either), then now might not be such a great time to start up new initiatives before things get any worse than they already are.
How can retailers stay competitive and survive a recession?
Highlight what sets you apart from your competitors
You may have heard the term “Unique Selling Proposition” (USP) before. It’s a marketing term that refers to the one thing your business does better than any other and how you can use it to convince customers that they should choose you over your competitors.
The USP is handy for small businesses because it helps them stand out from all other options in their category. By highlighting what makes them special—something specific about the products they sell or their business model—they can draw new customers in while also offering an incentive for regular customers loyal to the brand. Embracing what makes your brand unique keeps customers coming back, even during hard times.
Here are some examples of successful USPs:
M&Ms: “The milk chocolate that melts in your mouth, not in your hand.”
Domino’s Pizza: “You get fresh, hot pizza delivered to your door in 30 minutes or less or it’s free.”
FedEx: “When it absolutely, positively has to be there overnight.”
Identify with your customers
When there’s an economic crash, people are tight on cash. They’re turning to thrift stores, discount outlets, and online marketplaces that sell cheap goods instead of spending their money on brand new things from local retailers. So, if you want to survive this recession and come out on top, focus on understanding why consumers are shopping at all.
To win in this climate, retailers must understand why consumers shop and how brands can best fit their needs. That means talking with them—and more specifically, asking questions about what they’re looking for before making assumptions about what type of product or service they need or want.
It’s also important to understand their pain points as well as their preferences—things like demographics are not just helpful when determining who makes up your target audience but also how they will react when buying something new.
Focus on digital marketing
When resources are tight, one of the first things companies will slash is their marketing budget. However, marketing during a recession is an opportunity. If you’ve been focused on improving digital marketing over the past few years, then now is the time when your efforts will pay off.
General conversion rates may go down because consumer spending has decreased overall (consumers aren’t buying as many things). This means fewer advertisers are competing for impressions (ad space), so you’ll have more options and better pricing than ever before—you just have to take advantage of them! Leverage platforms like Google Ads, Facebook Ads, and social media that are often cheaper than in-person advertising.
Cut down on unnecessary expenses
A recession is an opportunity to identify and reduce bad costs. You can’t afford to pay for unnecessary expenses, so it’s good to know which ones are unneeded to cut them out.
Unnecessary expenses are those that aren’t crucial to running your business, like buying a new chair because your old one has seen better days or maintaining a second office space when you only need one.
To help identify the unnecessary items in your business, list all the things you spend money on each month. If something doesn’t directly contribute toward making sales or generating revenue for your company, then it’s probably an unnecessary expense—so get rid of them!
Examples of unnecessary expenses include:
New equipment (when old equipment works perfectly fine!)
Focus on opportunities in new formats and markets
If you’re struggling to stay afloat in your current market, try focusing on opportunities in new formats and markets. The best way to do this is through data. By analyzing the data from your business, you can identify potential growth opportunities. For example:
If your company only sells products through brick-and-mortar retail locations, consider expanding into online sales if revenue at these physical stores is slowing down.
If your product line has been limited to one line of goods, consider adding others that may be better suited for times when people are less willing to spend money (like basics like cotton t-shirts or comfortable shoes).
Consider opening pop-up stores where people can’t go online but still have the opportunity to buy something—such as during conventions or large social gatherings.
Be on omnichannel
If you want to stand out and get customers to buy from you during a recession, providing the best customer experience is key. One way to ensure a seamless customer experience is through an omnichannel strategy.
Omnichannel retail refers to integrating all aspects of your business into one seamless experience for your customers. It’s about making it easy for shoppers to buy from anywhere and everywhere, whether in-store, online, or on mobile devices. In other words, they can buy from you wherever they are: at home or on the go.
Omnichannel retailing can increase sales by reducing return rates because shoppers won’t have trouble using products as intended or needing assistance with product selection when shopping in-store. In addition, omnichannel enables retailers to offer more personalized recommendations based on past browsing history and purchases.
Want to try out omnichannel retail for yourself? Omnirio is the easiest way to get started.
Stay informed on economic news and trends
To keep your business alive, you must stay informed on current economic affairs that affect your company. You may not be a financial guru, but that doesn’t mean you can’t use the information available to make good decisions.
Here are ways to stay informed:
Read newspapers regularly. Subscribe to daily newspapers or get a subscription for online versions of prominent newspapers such as The Philippine Star and Business Mirror. These will help you know what’s happening in terms of economic news and trends in your industry.
If podcasts aren’t really your thing either, we would recommend checking out YouTube videos from experts like Behind Asia.
There are many ways to weather the storm in a recession. The most important thing is to stay informed on economic news and trends so that you can adapt quickly to changing market conditions. In this article, we’ve covered some of the major points we think are worth considering if you want your business to weather any future downturns. If there’s anything else you feel we missed out on, let us know in the comments below!