Times are tough, but that doesn’t mean all businesses are doomed to failure — yes, even the discretionary spending-based ones.
There’s no argument that Australians are experiencing economic misery. A combination of inflation, interest rates, and low productivity has brought the economy to its knees, and consumers are feeling more pinched than they have since 2011 according to one recent analysis from the Committee for Economic Development of Australia.
Businesses in sectors like hospitality, retail, entertainment, and recreation have been left to compete over dwindling dollars as data from the Australian Bureau of Statistics shows consumer discretionary spending plummeted by 2.9% in the past 12 months. Due to the Reserve Bank’s reluctance to cut rates, those on the lookout for financial relief may be left hanging until as late as mid-2025.
There are myriad stories of companies collapsing, but the truth is even in a bad economy, there are also many businesses on the rise. As a pandemic-era business, Dr. Dough skyrocketed in popularity even as other operations folded left, right, and centre. The underlying qualities that have insulated Dr. Dough to become a resilient business are just as relevant in tomorrow’s market as they are today.
That is, to make sure every aspect of the supply chain caters to the customer experience. This is a principle that I have brought with me from my time working at one of the world’s biggest fast-food chains. The consistency and reliability of having a uniform offering is key to building trust with customers who may be reluctant to part with their hard-earned dollars unless they feel reassured of the quality of what they will receive.
Starting with product, consider if every aspect adequately fulfils customer expectations. Start with pain points like what issues your customers may be facing with your product or ordering processes. Seek feedback and listen to customers as you attempt to solve these issues and improve your product. Consider user experience as integral to e-commerce and keep channels of communication open to quickly resolve issues as they arise.
For example, at Dr. Dough you can order until midnight for next morning delivery. That is important to us because today you need to operate around the shopping habits of the consumer.
Tailoring the supply chain to customers also extends to branding, presentation, sales channels, and of course, staffing and not relinquishing responsibility of the last mile and delivery partners. At Dr. Dough we have chosen to go the extra mile by training and retaining a core team of contracted delivery drivers. We’ve cultivated a positive work environment and also provide support to these drivers every minute that they are on the road so they are more likely to go above and beyond for the customer too. It’s this high level of service that allows brands to bank on customer goodwill and withstand a downturn.
With economic uncertainty, anxious customers are also more likely to turn to trusted brands. During the height of COVID, the total brand value of the world’s most valuable brands increased by 5.9%. Why is this so?
While it’s true consumers are more price-sensitive in a recession and more likely to delay making big purchases, they are still clearly spending money on the things they value. Customers may be spending less on discretionary items, but that doesn’t mean businesses should give up on winning them over.
Product must be on point, suppliers and employees need to be properly managed, and constant tweaks need to be made to e-commerce sites to put the user experience at its core. Downturns are a time to inspect every component of your business to make sure they are working at full capacity. But the true secret to selling in a downturn is to make sure you identify deeper consumer motivations and meet them.
Contrary to popular assumption, Dr. Dough has never been in the business of selling donuts like the hundreds of other donut brands flooding the same market in which it operates. I attribute the brand’s success and longevity to a strategic decision we made early on — that is to sell ‘boxes of happiness’ through a shopping platform that is easy and convenient for customers to enable connection amongst senders and their recipients. We are in the business of selling gifts and by proxy, facilitating meaningful relationships.
There will always be demand for gift-giving. A recession doesn’t reduce consumers’ need to share happiness or bring a smile to their loved ones’ faces. And it doesn’t take a tough economy for businesses to benefit from such universal desires. Brands that find and act on these deeper consumer motivations are ones that will cultivate resilience and profitability no matter the state of the economy.
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Kristy Bannister is the co-founder of Dr Dough Donuts, selling 600,000 doughnuts a year. Dr Dough Donuts was founded with the vision to share happiness by enabling easy and meaningful connections between senders and recipients.
