We’ve all heard of the dark horse, right? But how about the green horse? It’s the unexpected leader in brand land during this cost of living crisis, and these businesses are heads above the rest in terms of positioning themselves for price increases.
Who is this noble stallion, you ask? Well, it’s those unicorns from the purpose-led space.
If you think about it, these brands already cost more in terms of entry point than mass and mainstream brands, so surely they can’t pass on a further increase to consumers in a competitive market? Wrong. They can and they will. For good reason.
Firstly, they will because doing business with ethical, sustainable and transparent supply chains costs more, so to stay in business, they need to. Secondly, impact-driven brands have a unique opportunity in the Australian market to transform this obstacle into a moment of authentic connection with consumers, potentially boosting brand loyalty and uptake.
These brands are better positioned to break bad news as they are already having a conversation with their customers. They invested in human-to-human storytelling far before it was essential. They can explain the why behind the percentage increase in dollars and help the consumer connect the dots and justify the costs in an authentic way.
A lot of people will say that consumers don’t care about the above, especially right now. This line of thinking believes that consumers care only about price, and no matter how impactful the brand or the purchasing power, a price increase isn’t good news for any customer. But it’s important to remember that the faceless mass brands are also increasing their prices at the moment too – it’s just that they are not equipped with, or are not interested in, communicating the rationale to their audience. So, given this, who wins that race?
In an era of rising costs of supply chains, services, and goods, brands across all industries are facing the inevitable need to increase prices but ESG-skewed brands can help customers use their limited funds to buy quality products by exploring and explaining why the product costs more.
Whether doing this by leveraging that community that you have invested in building and sending a very transparent email from the founder or by creating some super simple social infographics to show how your supply chain rewards the humans who are part of it, there is no doubt about it that brands who have invested in storytelling and defining their purpose in the consumers’ hearts and carts are better positioned here to start the conversation.
A local Melbourne brand, Nala, is an inclusive underwear brand that has done this really well. As a customer of the brand, I received a heartfelt and personal email from the founder and creator, notifying me of the upcoming price rise, explaining the reason behind it, and offering me to stock up at the existing price if I felt compelled. As a member of the community, I felt on the inside, and this felt good. I understood the price increase and wasn’t surprised by it.
Après Studio is another great example, with its transparent pricing approach offering consumers insight into its fashion production costs. By providing enumerated breakdowns for new garments, including fabric, labour, and marketing expenses, the brand educates customers, builds trust, and counters perceptions of corporate greed. This transparency empowers informed purchasing decisions and sets Après Studio apart in an often opaque industry, fostering a more conscious consumer base.
While these may seem like straightforward marketing tactics, the secret is that these brands invested in a conversation far before it was needed in this way. Building trust and authenticity is challenging, especially for those brands that may no longer be independent or founder-led – but it’s more essential than ever before. According to new research by Catalyst, there has been an 8% rise since 2022 in consumers blaming corporate greed for inflation. And, while we know that may be true of some companies, things like disrupted supply chains, cost of goods and services and, above all, ethical governance have increased the bottom line for all brands – especially those who are in business for people and planet, not just profit.
So what’s the take out here? If you are a brand with purpose space looking down the barrel of a price hike, start the conversation. Be open. Be transparent. Trust the goodwill that you’ve spent forever baking into your brand. And most of all, don’t try to hide or slip it past. Talk to the why and why it matters.
And if you aren’t a brand in the ESG space, life is about to get harder for you. Sales and price slashing will get you somewhere, but not where you need to be. It’s time to look inward and forward to future-proofing your brand.
Never miss a story: sign up to SmartCompany’s free daily newsletter and find our best stories on LinkedIn.
