If this year you asked Santa for a summary of the 2023 economic predictions and what it might mean for your business (instead of socks? c’mon!) then your Christmas wish has been granted.
We’re rounding up our blog for 2022 looking ahead and diving into ways you can get ready for 2023.
The Good-ish News
There is such a mixed bag about the economic outlook for 2023. There are so many signals that are contradicting each other – but at least there seems to be good news in Australia when looking at the concerns around a recession.
Experts are suggesting that Australia will probably avoid a recession – chalking it up to more women in the workforce as a result of high housing prices and really good child care, a stark contrast to the United States.
Even more positive signs are around consumers – consumer sentiment has rebounded slightly from November to December. And retailers must be over the moon that shipping containers have come down from pandemic highs to pretty much the pre pandemic levels.
The Bad-ish News
The less optimistic approach taken by the RBA points out consumer spending has been very robust and has been felt over the Black Friday period for WebSavvy clients. The problem is that the features that are fueling that consumer spending are somewhat finite. Most people are using savings banked over the pandemic – and that might start to run out a little faster as inflation drives up costs for us all, not to mention interest rates.
The other consideration is that if the United States does indeed go head first into a recession and China follows suit – what impacts will we feel here in Australia. It will be somewhere between a little and a lot!
So already there’s information from some pretty reliable sources that are projecting 2 different directions. So the short answer is… no one is really all that sure.
As an advertiser – what can you do about it?
There are two things to examine a little closer. The people you’re advertising to and the products you promote.
First: people (because that should always be the number one consideration)
In Australia the recent interest rate hikes have put a cramp on a lot of discretionary spending. The group of people feeling it the most? Young families with a mortgage have seen their repayments growing bigger and bigger. If that’s your target market… you might see sales slow down there – unless your product is in the goldilocks zone (see below)
Conversely – if your target market is a little younger or a little older, it may not be such a gloomy outlook. Older couples are likely to have a little more disposable income if their kids are out of the house and the mortgage is mostly paid off. The same could be said for young professionals or DINKs (double income no kids). While these two groups will be seeing a pinch, it won’t be near the same degree that young families will see.
On to the second consideration: Your product and positioning
There’s a real binary choice here. It’s premium or value. The middle of the road category may find a drop since people will either be going for a lower cost option, or saving to splurge on the premium choice.
So the consideration here is in your creative – how can you position or promote your products so they highlight premium qualities or cost saving benefits. These appeals may grow even stronger if there are more pressures on people’s pockets.
It sure feels like the economy could go a few different directions, things seem to be at a crossroads at the moment. So do your planning while there’s still time.
One thing to look out for – the success of Boxing day sales. If they’re strong it’s a good indicator that recession is holding off or will be muted. If Boxing day sales lag, the economic outlook for 2023 might just follow suit.
So there you have it. A couple of predictions for the state of things in 2023, that we’ll either all pat ourselves on the back for getting so correctly, or quickly add a few *updates* to earlier next year.
But for now, onto the mince pies and Christmas hats.
Wishing you all a wonderful festive period and bring on 2023!