Since the onset of COVID, brands in the product market have enjoyed a nice uptake in sales. However, according to Deloitte Insights, a lot may be changing this year. According to their research, 2022 is shaping up to be the year of the bricks and mortar comeback. Although online shopping and delivery services will continue to increase and employees will continue to work from home, we will be seeing some serious shifts when it comes to the experience market.
The industries who will be most powerfully impacted are restaurants, hotels, spa and salon services, gyms, and in store shopping. What the data tells us is that although online shopping for commodity and home necessities is a permanent trend, people are longing for in person experiences.
This is great news for the industries that took the hardest hit of all in March 2020. So, the question now is how to make the most of it? What is the path forward to reclaim our market sector and stand out amongst the sea of competition who as has also been waiting two years to regain their footing?
You may be surprised to hear this but switching your pricing strategy to value based pricing is one of the most effective ways to do this and now is the best time to do it. Before you sign up for that Groupon campaign, review our case for why your pricing needs to trend up, not down.
1. The Market Can Handle It
With the vaccine out, and unemployment at only 4.5% higher than it was in February 2020, the economy finally seems to be getting back to normal. Over the past two years, the restaurant industry has had to increase prices due to the tremendous financial strain on staffing, overhead, delivery, and sanitation tax to name just a few. The market understood the situation and accepted the new pricing and while many restaurants met their end, it was a fantastic opportunity for others. Over the duration of COVID the market has accepted the new rates and there is no pressing need to revert to old pricing. In short, the market does not expect the pricing to go back down. They have permanently adopted the new pricing model.
2. You Need a Better Competitive Advantage
If you are a chef run restaurant, you probably want to skip this paragraph because I am about to say something you’ll hate. The data shows that people who will be coming in to dine moving forward are not coming in just for your food. With the surge in delivery offerings by companies like Grub Hub, Door Dash, and Uber Eats, if someone were just after the food, they would have it delivered to their door. They are coming in because they are spending more time at home and when they finally venture out into the world of the living and make the now tremendous effort to get dressed and hire the sitter, they are doing it with the expectation that they are in for a bona fide experience. Spas, restaurants, hotels have never been so hard pressed to deliver an atmosphere and experience that will keep customers raving and coming back. To deliver on this promise, it is now vital to maintain a price that allows you to deliver well and consistently on these experience cycles. This is the time to do some real brand work and develop out those brand standards, hire that interior designer, and hire and keep better employees.
3. Marketing will cost a pretty penny
If you find yourself in one of these rising industries, no doubt the cost for marketing will also rise. Cost per clicks will rise and every margarita happy hour special will outdo the next. That’s not to mention investors adding much new competition to the marketplace after seeing a fantastic opportunity. In short, posting food pics every third day and announcing your happy hour just is not enough to keep it going this year. You will need a legitimate marketing plan and strategies to build your brand base and showcase your unique position in the market. What is more, online shopping and ordering hasn’t gone away, so now the standard for bricks and mortar businesses is to not only regain their foot traffic but also grow their online sales.
It is undeniable that the landscape for the bricks and mortar industry has been put through the ringer and is forever altered. Where these ventures once won with competition pricing and convenience, they will now have to win with one-of-a-kind experience and irreplaceable value. After all, local markets are the lifeblood of communities. The value of such establishments is not simply in the products, but as the backdrop for life’s moments – the restaurant he proposed at, the first mother/daughter spa day, and the hotel we stayed at on our trip to celebrate her graduation.
References: Deloitte Insights June 2021 Consumer spending trends after COVID-19 | Deloitte Insights