Editor’s note: Camilla Butler is senior research manager at Euromonitor International, London.

In the last few months, Euromonitor International received a high level of interest from clients in how we reported the last global financial crisis of 2008, also known as the Great Recession. These requests came from many regions and organizational types. In response, we republished industry reports (registration required) from 2009-2010, which analyze the recessionary impact on various industries. 

The shock to the global economy as the coronavirus health crisis morphed into an economic recession is quite different to that seen in 2008. The lockdown imposed on one-third of the world’s population disrupted everything from manufacturing to finance. However, some knock-on effects on consumer behavior and examples of how companies navigated their way through the 2008 global financial crisis resonate in 2020. 

Tightening of belts leads to trading down

One of the most notable trends across all regions in the immediate aftermath of the 2008 global financial crisis was the reversal of trading up for trading down. In certain industries, such as beauty and fashion, this took the form of trading down from premium products to mass products. Within the alcoholic beverages industry, sales of premium spirits suffered as consumers moved to a lower price platform. Domestic economy lager was the star of the alcoholic drinks market in 2009 as cash-strapped consumers traded down and prioritized local products. Companies that diversified into these product areas were better equipped to weather the crisis.

Growth in private label was another feature of trading down in 2008-2009. Private label grew across a wide range of FMCG, from apparel to tissue and hygiene, making inroads into categories that usually have a high level of customer loyalty. In the aftermath of the crisis, value for money, sales and discounts were vital in kickstarting sales growth. This was especially true in the apparel market, which saw the heaviest contractions of all key sectors of household spending. 

Echoes of “cocooning,” in-home seclusion

However, several non-essential products remained resilient and even dynamic throughout the 2008-2009 crisis period. Anti-aging products withstood the downturn as consumers were not prepared to limit spending. At-home beauty products fared better in 2008, such as hair colorants, perms/relaxants, depilatories, nail polish and teeth whitening remedies. These products benefitted from the “at home” or “cocooning” trend and echoes in today’s home seclusion as people are in lockdown. 

The Great Recession reinforced evolving consumer habits

The most obvious and long-lasting was the growth of e-commerce. The SARS outbreak in 2002-2004 catapulted China ahead of the rest of the world in terms of online purchases. However, after the 2008 global financial crisis, online retailing USPs came to the forefront across the rest of the world as consumers looked to compare prices and get the best deals online. 

The crisis also saw myths pertaining to online sales overturned, for example, that no one would purchase clothes online. In 2020, with so many people unable or reluctant to go into stores, the internet is providing a literal lifeline to many consumers across the globe. Many people who have switched to or increased their online purchases during lockdown are likely to retain the habit in the aftermath – not just for convenience and lessening exposure to health risks but also the ability to search for the best prices. 

After the 2008 crisis, it was believed that the lack of instant gratification would hamper the adoption of online shopping, but delivery times have been slashed. Chinese giant JD.com claims to deliver 90% of orders within 24 hours. It wasn’t just e-commerce that grew during the last financial crisis but also the sales through discounters. The so-called “Aldi effect” appeared, seeing cash-strapped consumers looking for bargains and discounters entering markets which had previously been resistant to them.

Travel and tourism bear the brunt 

As hotels elbowed their way out of the 2008 crisis, they utilized unprecedented levels of discounting in the developing market of luxury hotels. This led to the price gap narrowing between luxury and mass hotels. Spas and hotel/resort spas were catalysts out of the gloom in 2009 with local tourists mitigating falling international demand. 

2009 was a dreadful year for the airline industry, which will likely pale in comparison to 2020 with most fleets being grounded. As a way out of the 2008 financial crisis, airlines joined alliances in an attempt to boost network connections and maintain passenger loyalty. Long haul players revamped their short-haul products and many airlines, such as Alitalia, introduced a premium economy option. 

Practical lessons to be learned today 

During the 2008 global financial crisis, manufacturers responded in several ways, which directly resonate today. Across FCMG, there were cross-category moves and a focus on more basic categories, such as shampoo, as well as movement into more dynamic categories. Back then, premiumization was deprioritized, leading consumers to move away from brands and toward private label. The Global Recession also saw companies introducing smaller pack sizes, mass products and discounting, while cutting ailing brands and focusing on multi-channel and new media. All of this is relevant in 2020. 

Within the retail ecosystem, discounters grew but supermarkets put up a fierce opposition by cutting prices of branded goods, launching more private label and making sure this was communicated effectively to their consumers. Many companies furthered their international ambitions – moving into high-growth regions. Although in some industries e-commerce got a boost, in others such as pet care – where personal touch is very important – there was less of an uptick. Meanwhile in 2020, a surge in e-commerce, particularly in grocery, is likely to cause a paradigm shift in some markets.

After the Great Recession, global retail spending took three years to return to 2007 pre-crisis levels and left a permanent mark on consumer behavior. Despite the many differences between the nature of the crises in 2008 and 2020, there are likely to be some similarities on the shift in consumer spending and behavior and the strategies used to navigate a way out of the crisis. 

Other expected changes to the consumer mind-set in 2020 are driven by the health threat of COVID-19. These include a reduced consumption of non-essential items and anti-ostentation, a focus on preventative and immune health and on spiritual and mental wellness. By balancing these threat-based behaviors with those mentioned above manufacturers will be well placed to navigate the new normal.