More uncertainty could knock consumer confidence
Announcing her intention to call a snap general election, Prime Minister Theresa May claimed Britain needed “certainty, stability and strong leadership” following the EU referendum.
Clarity over the Brexit process could calm nerves as the latest GfK figures show consumer confidence is “stuck in the doldrums” as shoppers “hold their breath”, waiting for reassurance regarding the UK’s negotiations with the EU.
GfK’s consumer confidence index (CCI) puts overall consumer confidence in March at -6 and the major purchase index at 6, five points below the same month in 2016.
But with an unexpected general election now on the cards consumer confidence could be set to take a further hit.
Over the next two months consumers will also be looking for reassurance on a number of other issues affecting confidence, from the prospect of a second Scottish independence referendum to the price hikes on consumer goods and potential rises in interest rates.
Should brands pick a side?
Global events such as the election of President Donald Trump and last summer’s EU referendum have shattered the status quo and challenged the unwritten boundaries of political correctness. The UK general election on 8 June looks set to sow further division as political parties go to battle over their differing interpretations of Brexit and the impact it will have on the country.
Many brands have already shown a willingness to take a stand within this divisive climate. Last year Lego became one of the most high profile brands to back the Stop Funding Hate campaign, which urges businesses to stop advertising in newspapers like the Daily Mail on the basis that such publications spread hate speech with regards to immigrants and refugees. In the US, brands such as Airbnb, Starbucks and Budweiser have publicly opposed Trump’s policies, with the latter running a Super Bowl advert in February that appeared to criticise his immigration stance.
Taking such a public position carries the risk of alienating one section of the population while gaining the support of another. Indeed Budweiser’s actions were praised in some quarters, but also prompted a #BoycottBudweiser campaign from Trump supporters on social media. At the same time, brands risk appearing weak or irrelevant if they fail to articulate a position on divisive issues.
Many brands seek to project themselves as having strong core ‘values’. Those same brands must decide whether to speak up for those values during the heat of the general election campaign.
Future direction of Brexit
The priorities of the team leading the Brexit negotiations over the next two years will have a big impact on what the UK’s relationship with the EU looks like.
While the Liberal Democrats used the announcement of the snap general election to campaign against a “disastrous hard Brexit” and suggest Britain should be kept in the single market, May stated her intention to make a “success of Brexit” by eliminating “uncertainty and instability.”
There is little uncertainty regarding the rising cost of inflation post-Brexit, with analysts already suggesting that between now and the conclusion of the process the price of food imported from the EU will rise by 8%. The price of goods is already up 2.3% compared to the same time last year, according to Kantar Worldpanel.
The decisions the new look government will take on the status of EU migrants is of prime importance to brands such as Pret A Manger, which in March confirmed it would take 10 years to replace EU staff as just one in every 50 applicants seeking work at the cafe chain are British.
Will Trump tactics rear their head?
Much was made of Donald Trump’s aggressive marketing strategy in winning the US presidential election last November. The reality TV star spent a relatively small amount on paid media, preferring instead to accrue billions in earned media through his confrontational style and controversial announcements. The press obliged by giving Trump endless headlines, but he also proved adept at manipulating social media as he clocked up over 40 million Twitter mentions versus Hillary Clinton’s 26 million between July and September 2016.
It will be interesting to see whether any of the UK’s political parties seek to replicate these tactics in the lead-up to the general election on 8 June. Of course they lack one crucial element – Trump himself – but with only 51 days until voters go to the polls, they may seek to make a big impact by prioritising viral mass marketing over carefully thought-out micro-targeting.