A double dose of uncertainty: what permacrisis means for consumers and brands
The timing of this cost of living crisis makes it unique. We have experienced financial crises before, but none that have come off the back of a global pandemic. Through this blog series we’ll explore how this unique combination of circumstances is affecting consumers, what post-pandemic behaviours and trends are surviving the cost of living crisis, and the implications for brands.
The Covid pandemic was a great leveller. No matter who you were or what your lifestyle was, you were affected. And just as we emerge from those life-changing few years, along comes the cost of living crisis. Once again, we are all being forced to recalibrate.
What’s significant about this is that we’re experiencing a double dose of uncertainty. Collins Dictionary’s word of 2022 is ‘permacrisis’. It refers to an “extended period of instability and insecurity” and highlights how this unique set of events is shaping our lives and language.
We’re hearing this directly from customers as well. We recently ran an online cost of living community where we spoke to Tom*, an affluent first time home buyer. He delayed buying a Central London apartment during the pandemic because his job security was uncertain, but as things got back to normal he made the leap and bought a flat with a mortgage carefully calculated on his future earnings. Now he is plunged back into uncertainty: his calculations and assumptions about the future have been proved wrong, and he is already consumed with worry about how he will pay his mortgage when it’s due for renewal in two years.
During another Customer Closeness event, we heard from Anne* who works for a housing association in internal comms. Having always been prone to anxiety, the isolation of lockdown exacerbated it. She now struggles more than before to engage with strangers. The rising cost of living is stretching her finances to breaking point – her 11-year old daughter saved up to buy her own stationery to go back to school in September. At work she sends out communications to tenants on ways to access financial help for which she isn’t eligible, yet is too anxious to reach out to her bank and others for help herself.
This isn’t a short term thing. In fact, customers we’ve spoken to believe it’s going to get worse before it gets better. What does a double dose of uncertainty do to our psychology? Brands need to pay attention and understand the implications for consumer behaviour over the next few years.
Research studies show that uncertainty is a major cognitive and psychological stressor. Uncertainty puts us into survival mode, meaning we become more risk averse and make decisions that give us a feeling of safety and control.
Brands will need to implement strategies that reassure and look after customers. The supermarkets are currently leading the way: By re-introducing its much-missed free coffee, Waitrose is putting its arms back around its customers; Iceland has introduced its Food Club credit scheme offering interest-free loans during school holidays; and ASDA’s ‘kids eat for £1’ initiative has served up over half a million meals since the initiative launched in June. If decisions over the next few years are all about safety and control, brands will need to work continuously to convince customers they are worth taking a risk on.
*Names changed for confidentiality