Squeaky bum time for SA
“Junk status” – two words that evoke a generally negative emotional response in every adult South African. The question is: what can brands do to stay ahead?
Though we are still reeling from the April credit rating downgrade announcements by Standard & Poor’s and Fitch, we still don’t know what the long-term economic effects are going to be, and, more importantly, to what extent they will affect ordinary South Africans. A quick search has revealed that it can take some countries up to seven years before any significant changes to their status can be seen.
Though consumers will not stop spending, their spending will become more conservative and discerning. SA has one of the highest ratios of debt relative to income in the world. So much debt, coupled with higher inflation rates, will force people to spend more money on essentials such as food, transport and interest payments, which will no doubt eat into their very limited disposable income. Luxury items or services may become a thing of the past for many.
Savvy brands are going to have to raise the bar in terms of how they operate. There is a strong likelihood that they will have to rejuvenate the segment they trade in if they wish to stay ahead. For the general consumer this often has a positive spin-off and benefit in the long run.
A few simple rules will not only have a big effect but help brands overcome the economic downturn:
Refine your product offering (create value for money in everything you do).Give customers what they want, when they want it and how they want it. In an age where customers are spoilt for choice, ensure they choose your brand above all others. The trick is to exceed all expectations.Quality and excellent service offering are key.Make sure every customer feels as if he or she is your only customer.Keep the brand agile and ensure you make changes when required.One benefit of the downgrade – as brands relook their operating models, redefine their offerings and ultimately deliver a better service – is that the consumer will benefit.
Junk status is like an iceberg: you can either make the necessary adjustments to avoid it, and sail past, or hit it, and go down.
I know what choice I would make.
The big take-out: Brands that wish to survive the economic downturn that will result from the recent credit ratings downgrade need to re-look their operating models, redefine their offerings and deliver a better service.