Over the last few years, life has been anything but normal. Consumers have been faced with rising interest rates and cost of living, while natural disasters continue to destroy homes and livelihoods across the country. Meanwhile, COVID-19 continues to put pressure on our health care system, with rising cases as new variants enter Australia.
85% of Australians say that the rising cost of living is their most concerning issue.
These and other factors have led to the environment in which we live our lives today being often referred to as one of volatility, uncertainty, complexity, and ambiguity. Such is the magnitude of such forces that ‘VUCA’ is of course an increasingly often used acronym. This new world we’re living in requires organisations, businesses and brands to not only understand the challenges customers are facing, but also learn how to operate in and thrive in this complex environment.
Consumers are facing increasing challenges
One of the immediate ways VUCA plays out for consumers is in the cost of living. In recent nationally representative research conducted by Nature, when asked what is most concerning to them, 85% Australians said cost of living. 70% of Australians say they have already being negatively impacted by rising costs. This will have an impact not only on consumers, but also too businesses, as most people plan to change their everyday shopping behaviour to try and alleviate the pressure felt by rising costs. This means engaging in a range of trade-off and trade-down behaviours to make things work budgetarily.
Recently, we’ve also seen large scale cyber-attacks targeting our service providers, amplifying the volatile environment customers are navigating. Most Australians (84%) are now concerned about the safety of their data, while 1 in 2 lack confidence in our Banks and Government to keep their data safe. This all contributes to the ambiguity and complexity people are facing as they make everyday decisions. This situation will only get better once organisations rebuild lost customer trust, which is eroded each time there is an attack on any known brand.
Brands are at risk in this environment
So, what is the impact of our present VUCA environment on brands? In this new world it can be reasonably expected that we will start to see trade-down behaviour, as consumers re-shuffle priorities to ensure they can still pay for essentials, such as rent, bills and petrol, and do their best to carve out space for discretionary spending. In fact, we found that almost all consumers (94%) are saying they are planning on changing their behaviour, whether this be buying on special or finding lower priced substitutes.
This places brands at risk, particularly those that fall under categories like groceries or utilities, the area where 5 in 7 consumers are feeling the pinch the most. To navigate this environment, brands need to communicate their value to consumers, and this doesn’t mean price alone.
Growing brand value
Perceived value is multi-dimensional and has many influences, such as availability, brand credentials, packaging, personal experience, reviews or even sustainability credentials. In our recent self-funded study, it was found that almost half of Australians under 30 claim they would stop using a business if it was not acting sustainability, uncovering sustainability as an area brands could show value to their customers.
Another example is demonstrating security credentials, which can be expected to be even more important to consumers in light of the recent cyber-attacks. Reinforcing the value of a brand will not only bring brands top of mind for consumers, but also helps defend brands in the increasing VUCA environment.
It is a time for brands to get onto the front foot, to anticipate consumer needs, to act not merely react. To build or in some cases rebuild trust through a people and planet first lens.
Brands must find ways to tackle the challenges of our era with a different kind of VUCA- Vision, Understanding, Clarity and Agility.
To read more about our sustainability insights series, click here.
To access our data security report, click here.
For further insights on how to make better business decisions in a VUCA environment, leave your details below.