Living standards have taken an enormous hit amid the cost-of-living crisis – in Britain, they are set for the biggest fall in over 60 years, according to the OBR. Reversing more than a decade of recovery from the last global recession, household incomes are set to plummet by a daunting 7% through 2025, coupled with significant inflationary pressures and massive hikes in utility bills. This is not simply a consumer issue: a drastic decrease in disposable income accompanied by turbulent economic conditions will result in businesses’ revenues similarly declining, only exacerbated by the twin obstacles of supply chain issues and spiralling inflation.
Retailers, eCommerce sites, and App stores alike will be confronted by a customer base limited by its rapidly weakening buying power. It is time to adjust – and economic uncertainty means that there is little room for error. Businesses must now focus on developing their understanding of consumers, which will become the key to making informed product development and reshaping the customer journey. The cost of remaining stagnant will be severe as the economic environment presented by a depressed market, mounting overheads, and unprofitable and potentially unfit product development could lead to insolvency.
Consumer data: a web of minefields and opportunity
When struck by financial hardship, consumers are forced to make tough decisions about their expenditures. This makes an in-depth understanding of their habits, wants, and needs essential for successful sales. Retailers need these insights to accurately target their customers and subsequently incentivise them through customised and pertinent offers.
Businesses – particularly retailers and application developers, for whom product development and production are highly expensive – can benefit immensely from optimally utilising consumer data. For a product to perform well in the market, it must address the demands of its consumer. In order to succeed in meeting this demand, however, product innovation must be centred around entering a collective consumer conscience. Consumer data presents the path towards understanding this conscience, with a quantifiable analysis of insights, which achieve irreplicable results both in terms of understanding and appropriately addressing macro movements within the market.
Collating information, such as when and how frequently consumers shop, the types of products they buy, and how much they spend across various sectors, provides an inimitable window into consumer behaviour. While this is certainly extremely useful for retailers, the most compelling consumer data of all is product-level. Presenting an itemised analysis of consumer expenditure, product-level data allows patterns to be closely examined. This reveals detailed information about an individual’s habits and helps identify opportune areas for market growth.
Most intriguingly, product-level data enables businesses to investigate their own product development errors and examine where further investment may be needed. Suppose, for instance, that Asda have observed strong sales across their fresh food, yet their ready meal range is failing to reach projected levels. Itemised consumer data allows Asda to analyse the expenditure of customers who buy their ready meals from a competitor, such as Lidl. Specifically, it enables them to gain insight into the types of meals they are buying -are they choosing pizzas, British classics like sausage and mash or Indian takeaway-inspired dishes? The ability to view this data would allow Asda to grasp exactly why their competitor’s products are outperforming their own, to observe which market sectors are thriving and then inform the development and stocking required to compete. Armed with this vital knowledge, they can avoid the costly mistake of unprofitable product development and irrelevant inventory. Although large multinationals like Asda would be able to take such an error in their stride, for a small business competing in the current economic climate, the impact could be catastrophic.
Itemised data is highly-valuable – but why isn’t everyone using it? In short, it remains a scarce resource, next to impossible to obtain in-store and still difficult to collect online. Primarily, retailers are only able to collect data through their websites, while other methods necessitate explicit consent from the customer due to the complex debate and legal status surrounding individual privacy and the digital economy. Typically a retailer will only have detailed insights pertaining to in-store behaviour – what a consumer buys from their competitors, and most importantly, why, are largely unknown.
Direct-to-consumer marketing platforms: data-rich and underutilised
When used optimally, consumer data is an opportunity for growth amid otherwise bleak economic conditions. Demand for first-party (that which is directly collected by a platform or outlet) consumer data is consequently set to catapult – knowing how to access it will become increasingly vital to compete in a difficult market. Data brokers primarily source second-party data, collecting and packaging first-party data to sell to retailers. Despite this, they have neglected to fully use the gold mine of first-party consumer data found on direct-to-consumer marketing platforms.
Somewhat self-explanatory in name, direct-to-consumer marketing platforms enable businesses to market directly to their target consumers. They are in a unique position to provide such a service due to the transparent and fair trade made with the consumer upon entry: the platform can access their spending data in exchange for a cash reward. This ranges from itemised expenditure with eCommerce giants like Amazon all the way to in-app purchases through Apple/Google stores. Although such platforms are already appreciated for their usefulness in marketing, they are also home to a wealth of first-party, product-level data that has typically been underutilised and present a credible yet simple solution to a problem many retailers have agonised.
Indeed, other sources of product-level data are available, but none offer a solution so inherently ethical. By offering consumers a cash reward in exchange for the sale of their data as well as relevant and targeted offers, these platforms empower consumers to reclaim fair remuneration for the information they have created, recompensating for decades of digital exploitation by Big Tech companies.
Advertisers, retailers, data brokers and consumers: all parties are justly rewarded through direct-to-consumer marketing platforms. In a time where the cost-of-living crisis has depressed consumer spending and businesses are reeling from its knock-on effects as well as unfavourable market conditions, innovative and multi-beneficiary solutions are vital and arguably the key to growth and success. The underutilised reserves of product-level consumer data available on these platforms, and the nuanced understanding of consumer insight the data can provide present businesses with a rare and fruitful opportunity to rise above economic turmoil and low consumer spending power.
