The recessionary mindset we see in society and the marketplace is a significant reset of aspirations and expectations, but it is not the explanation for everything.
It is, however, a big shift in how consumers are engaging with brands. Consumers have become more vigilant and scrutinizing. Hypervigilance is now the characteristic style of shopping and buying. AI is being used increasingly as a tool for fact-finding, comparisons, evaluations, and recommendations. Greater scrutiny is also seen in the ways people are rethinking health, food ingredients, scientific evidence and authorities, marketing claims, data privacy, and every other sort of business or politics as usual.
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Affordability is all these things, not price alone. It is price-plus. Brands can fix price but not the “plus,” if you will, which is well beyond anything brands can do. Because it is the overarching context of engagement. No point-of-sale fix will change that for the better.
What brands can do is insulate consumers from risk. A major aspect of weak sentiment is the feeling of exposure to risk. People are spending, but they no longer feel safe and secure from unexpected financial shocks, such as car repairs, new roofs, or medical expenses. This is the real affordability problem. Not affording the price of groceries but security from financial adversities.
The Federal Reserve conducts a survey three times a year, asking people about their spending, saving, and access to credit. One of the questions asks people to estimate how likely it is that they could come up with $2,000 if something unexpected were to happen. The six lowest estimates ever tracked have all been within the last two years, including five in a row through the most recent wave of tracking.
People feel exposed to risk. Their finances are keeping up but, increasingly, they feel at risk of ruin. The uncertainty and volatility of this post-pandemic moment have put people more on edge, and even though they have largely—albeit not always—found workarounds for higher prices, they feel that the security of their lifestyles has, in effect, become unaffordable.
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Brands must take the risk out of buying. Which is not a panacea for people’s lifestyles, but it is the kind of reassurance that will resonate.
The iconic example is Hyundai’s Assurance program during the years immediately after the financial crisis. The job market was in a six-year decline and people were worried about their jobs (not inflation like today, with the labor market strong). People were avoiding purchases that might stick them with obligations they couldn’t meet if they lost their jobs. Hyundai said if you buy one of our cars but lose your job later, we’ll let you out of the contract, and thus we will not saddle you with a car payment you can’t afford. Hyundai sales took off, and suddenly every kind of brand was offering something similar. It was all about taking the risk out of buying.
We are back to risk and risk exposure as the dominant factor in sentiment and confidence. Indeed, it is worse than ever and likely to remain week for years to come. In this context, affordability is an attitude not merely a price. Brands must look beyond the shelf to build a value proposition, one that will resonate with consumers who are reeling emotionally from volatility, uncertainty and disruption.
Contributed to Branding Strategy Insider By Walker Smith, Chief Knowledge Officer, Brand & Marketing at Kantar
At The Blake Project, we help leaders turn brand into a disciplined driver of financial performance — strengthening pricing power, competitive position, and enterprise value. Email us to start a conversation about enduring profitable growth. For The EBITDA.
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