Last week, I attended a hustings. This is where competing politicians battle, verbally, for our vote. In the UK, politics have got into a curious state as this vote is directly for a new Prime Minister. Normally, we support only parties and local candidates and the majority party leader is nearly always the one the Queen asks to form the government and hence become Prime Minister. Sounds complicated? Really it is not, but this is unusual, as this is for a new party leader for the party that holds a big majority, so is effectively a direct vote for the new Prime Minister.
And even more unusual because, with politics being unpopular, not many voters join the parties they vote for. So only 160,000 people have the right to vote in this election to select the next Prime Minister. The UK population is expected to reach 67.44 million by the end of 2022.
It is a vote that should not have happened and is unprecedented in hundreds of years since the incumbent Prime Minister was pushed out for routinely breaking the rules, written and unwritten, of government as well as the laws of the land, some of which he had made. It is not clear that all those voting fully comprehend the significance of this, but if we want stable government, free of corruption and a society where citizens obey the law and pay their taxes, senior elected leaders must lead by example.
Unexpected disruptive events are becoming common
Unexpected, mostly unwelcome, events like these are no longer rare. They have become the norm in a volatile and unpredictable world. In a recent paper, McKinsey identified the “12 disruptions changing the world” created by the Russian invasion of Ukraine. These are well worth a read as they go beyond the immediate impact of rising commodity prices and the poverty likely to arise from it, even in Europe itself, and the famine that will occur in areas of the Middle East, North Africa, Western and Central Asia.
McKinsey highlights the longer-term issues that need consideration, assuming our unpredictable politicians do not take us to war first. These include a supply chain rethink – this associated with a new battle for vital materials needed in strategic industries – a big global rise in defence spending, a rethink on food and energy security and all manner of technical and standards implications as the U.S. and China decouple in these areas.
McKinsey also talks about financial system risks created by an enormous set of risks from recession to collapse from emerging markets, through China and its property problems, the EU and the rest of the world. Nothing is stable.
Cutting back on marketing is foolish
For individual companies, the agility acquired at the height of the pandemic will need to become a constant. In the UK, we hear that the government is suggesting that marketing spending be cut to help keep prices low. This is a foolish idea. In recessional and difficult times, marketing spending should always be maintained and diving into the press reports I believe that is what all serious executives are concluding rather than the simplistic “cut marketing” route.
Every gram of strategic thinking and scenario planning will be needed. We are an industry with lengthy supply chains for raw materials and for chemicals. Leather is used in many sectors and each one will be impacted differently as supply patterns and consumer spending adapt to all the changes going on.
Many tanners have widely spread customers, such as the automobile industry, already beset by shortages of semiconductors. Others have overseas plants in China and Africa which have been working in effective isolation throughout Covid and will now be feeling these current events in different ways.
The poorest segments of society look likely to suffer most, as has been the case for the past two decades, only this pain looks likely to include large numbers of employed, even middle-class families, likely creating political problems. In all sectors marketing remains vital, but at the lower price end, the test is especially severe.
Getting consumers to value longevity
This becomes the moment to see if the value of longevity and repair can be put across to consumers, to buy less but more carefully in order to move away from the cheap disposable items made from non-durable synthetics such as polyester. Asking consumers to pay more is a difficult call at the best of times, but harder after decades of promotion of wasteful spending in fashion and other ways, and exceedingly difficult when so many are suddenly short of money.
Nevertheless, the story needs to be told, and a time of high inflation and of likely recession is perhaps a perfect moment to think before spending. To buy a pair of leather shoes which will last and be capable of repair, and a leather jacket that will be worn for years creates an opportunity to explain the importance of the cost per use. The consumer will certainly gain, and so will the climate and nature. Well worth the marketing spend.
Follow Dr Mike Redwood on Twitter: @michaelredwood
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