Forecasters joke about the end times and turnip lattes as inflation bites

CNN business

A woman drives her car into a street called “Wits’ End”. The sky is a terrible red, and strange things are happening. Mailboxes are spitting out letters. Rain umbrellas are not rainproof. A radio announcer warns of a “crisis on the horizon” and “another tough year”.

When he got home, the woman was carrying a green bag British home goods company Dunelm — turns to his fellow housemate: “Have you seen the situation over there?”

But there’s good news, if the good news is worth the £10 ($11.46) she just bought as a “teddy” blanket. The message: It may sound like the apocalypse, but shopping can bring comfort at home.

As the cost of living rises and fears of a severe winter recession mount, retailers around the world Customers are desperate to get their wallets out, especially as the all-important holiday season begins.

In major economies, there are some signs that retail sales are slowing. And the mood is dark. Consumer confidence has plummeted as decades of inflation and rising mortgage costs have raised alarm.

Same, some households still have savings from the pandemic period, and unlike a year ago, stores have ample (or too much) stock. The result is adverts, including Dunelm’s, that throw their hat into the bleak atmosphere, hoping to convince those with an impulse to spend to hit the shops.

“Every advertiser knows that the customers they’re talking to are feeling cost-of-living pressures,” said Matt Bourne, communications director of the UK industry group the Advertising Association.

Advertising budgets are under pressure — see Google’s ( GOOGL ) growth halt for evidence — as recession worries push companies large and small to cut costs.

However, this does not necessarily mean less advertising. Businesses can benefit from marketing during a downturn, helping to maintain their relevance and allowing them to quickly regain customers when conditions improve.

“We’re seeing brands that want to make sure they’re retaining consumers this time around,” said Ad Age editor Jeanine Poggi. “If brands stop marketing, or pull back on marketing, when things go backwards, they’re out of consumers’ minds.”

However, companies and their creative agencies know how important it is to strike the right tone at a critical time when every ad dollar counts.

Some are dealing with anxiety about rising food and energy prices. In Germany, promotional app Kaufda has launched a campaign at 700 Shell gas stations across the country with the tagline: “Get a fear when supplying, not when shopping.’

UK mobile phone The Giffgaff network, on the other hand, opted for an advertisement released in September.

The audience is transported forward in time Until December 2023. The biggest impact, we’re told, is a houseplant named Paul, chatbot marriage has been legalized, and the price of “everything” has gone up. However, while a man in a trendy coffee shop sips a turnip latte, Giffgaff assures potential customers that it offers fixed prices for the entire next year.

Brits grab a turnip latte in a recent Giffgaff ad.  The cellular network has promised to fix its prices for next year.

“It would have been strange for us not to reflect the cost of living crisis because I think it felt very appropriate,” said Simon Massey, co-founder of London-based agency Neverland, which developed the campaign. “How was the question.”

In the end, the group decided to expand on the levity, not to downplay the seriousness of the situation, Massey said, but because it has “enough to worry people” without the doom and gloom in its ads.

Advertisers are always deliberate, thinking deeply about their color palette, casting and set design. Now, those choices must also reflect the economic climate, said Stu Outhwaite-Noel, Creative Director of Creature, the London-based agency that developed the Dunelm campaign. Her team deliberately chose to emphasize household items that can be requested as energy bills rise, including a slow cooker and a bedding set.

“We didn’t want to promote frivolous or frivolous spending,” Outhwaite-Noel said, adding that the team quickly ruled out potential products like wall decor or pink flamingos in the garden that “they would have considered last year.”

Campaigns that debuted this fall set up what will be a challenging holiday shopping season for retailers.

The upcoming period accounts for half of the annual sales of some stores. And despite inflation, spending is expected to rise over the next two months, generating hundreds of billions of dollars in revenue in the US market alone.

Advertising spending should be increased. In the UK, the final three months of the year are expected to reach a record 9.5 billion pounds ($10.9 billion), including the World Cup, according to the latest forecast from the Advertising Association.

A shopper carries a shopping bag on Oxford Street in central London on November 7, 2022.

But companies are expected to show an awareness of the wider financial anxiety affecting customers.

The first campaigns released so far emphasize deals and savings. The latest from discount brand TK Maxx, the British equivalent of America’s TJ Maxx, features a crowd high-fiving a young woman who saved money on her family’s Christmas presents. U.S. department store Kohl’s ( KOHL ) — which is launching early promotions amid signs shoppers want to spread spending over a longer period — is going with the slogan “More Gifts, More Savings.”

“There’s really an answer to where consumers are right now in terms of thinking about holiday spending,” Poggi said, noting that brands are trying to determine “where they can cut corners.”

“It doesn’t mean that people won’t shop during the holidays, but they will think more about promotions.”

While many of the ads will still be positive and focus on celebrating “togetherness” after the darkest days of the pandemic, “it’s going to be about how people can do that with their budgets,” Bourne said.