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"Recessioncore" is a term that emerged in the fashion and design world to describe the particular aesthetic or style that reflects the mood and economic climate during a recession. Characterised by a minimalist, thrifty, and frugal approach, the term had been used to talk about the fashion and interior design trends popular in 2008 to 2011.
However, more recently, “recessioncore” has been making its rounds on TikTok. In the words of thousands of TikTok users: thrifting is more popular than ever, skirts are getting longer, make-up is getting lighter and those elements can only mean one thing… The economic recession is upon us.
This resurgence of this topic made us think… How can interior designers actively prepare for economic uncertainty? How can interior design studios be more resilient in the face of financial hardship? Is the interior design industry ready to face the punishing hand of the stock market and rise of the DIY customer?
In this article and video, we discuss how interior designers can survive and thrive in these unfavourable economic conditions.
How can interior designers prepare their interior design business for a recession?
Interior designers can build stronger businesses by finding their niche, expanding to crisis-resilient markets, diversifying their services and saving money for an emergency fund. In addition, industry experts suggest taking extra care of current clients and specialising in the more high-end design sphere.
Understanding economic slowdowns and recessions
An economic slowdown refers to a period of reduced economic activity, typically characterised by declining GDP growth, high unemployment rates, decreased consumer spending, and diminished business investment. A recession, on the other hand, is a more severe and prolonged economic downturn, usually lasting for at least two consecutive quarters of negative GDP growth.
Economic slowdowns and recessions can be caused by various factors such as:
- Decreased consumer spending: During tough economic times, potential clients tend to cut back on discretionary spending, leading to reduced demand for goods and services.
- Decline in business investment: Companies may delay or cancel expansion plans, cut back on capital investments, and reduce hiring due to uncertainty about the future economic conditions.
- Credit crunch: Financial institutions may become more cautious in lending, making it harder for individuals and businesses to access credit, which can dampen economic activity.
- Global economic factors: Economic slowdowns in major trading partners or global financial crises can have a spillover effect, impacting the domestic economy.
In 2023’s case, it is quite easy to see that the global political economy is what spiralled the last 12 months of economic distress. Russia’s invasion of the Ukraine caused a spike in energy prices, which affected all consumer items – and thus consumer spending. The story is much more complex, of course, but the root causes of our current situation are evident.
As an interior designer, your business can be influenced by the overall state of the economy. During recessions, interior designers can be affected in several and very particular ways:
Decreased Demand
As consumers and businesses tighten their belts during economic downturns, the demand for interior design services may decline. Individuals may postpone or cancel renovation projects, and companies may delay commercial expansions or redesigns. The reduced demand can lead to fewer projects and lower income for interior designers.
Budget Constraints
Clients who still seek interior design services during recessions often have tighter budget constraints. They may have less disposable income or limited access to credit. As a result, interior designers may need to adjust their pricing structures and find cost-effective solutions to meet clients' needs while staying within their budget limitations. Plus, if the interior designer is paid in a percentage of the overall budget, then the take-home money will be significantly lower.
Competition and Price Pressure
With decreased demand, the competition among interior designers intensifies. Clients may have more options to choose from, and they may be more price-sensitive. Interior designers may face pressure to lower their prices or offer discounts to secure projects, which can impact their profitability.
Industry-Specific Challenges
Certain sectors, such as real estate and hospitality, are particularly vulnerable during recessions. As these sectors face economic difficulties, interior designers who specialise in them may experience a significant decline in projects.
Longer Sales Cycles
During recessions, clients often take longer to make decisions and commit to projects. They may be more cautious about investing in design services and scrutinise proposals more thoroughly.
Supplier and Material Constraints
Economic downturns can affect the supply chain and availability of materials and furnishings. Some suppliers may face financial difficulties or reduce production, leading to potential delays or limited options for interior designers.
Freelancers and Self-Employed Considerations
Many interior designers operate as freelancers or run their own businesses. During recessions, they may face additional financial pressures as they may not have the stability of a fixed salary.
Now, these factors are not meant to scare you off. Interior design is not dying, and there is plenty that an interior designer can do to make their business more profitable.
Let’s go through the top ways you can become a more successful interior designer during a crisis
Diversify Service Offerings
Expand your range of services to cater to different client needs. Consider offering virtual design consultations, e-design services, or design packages for smaller projects. By diversifying your offerings, you can appeal to a wider client base and potentially tap into new markets.
Target Resilient Market Segments
Identify market segments that are less impacted by economic downturns. For example, focus on healthcare facilities, educational institutions, luxury clients or government projects that may have more stable funding sources. By targeting resilient sectors, you can increase your chances of securing projects during a recession.
Strengthen Client Relationships
Prioritise building strong relationships with existing clients. Offer exceptional customer service, follow up on completed projects, and maintain open communication channels. Satisfied clients are more likely to refer you to others, leading to potential new projects even during a slowdown. As we spoke about in “How To Work With International Clients As An Interior Designer”, many projects can come from one client, so make sure to build those personal ties!
Develop a Niche
Specialise in a specific area of interior design that is in demand regardless of the economic climate. For example, focus on sustainable design, universal design for ageing populations, or workspace optimization. Establishing yourself as an expert in a niche can set you apart from competitors and attract clients seeking specialised expertise.
Strategic Marketing and Branding
During slower times, you’ll have more time to review and refine your marketing and branding strategies. This can help you better communicate your unique value proposition, highlight your expertise, and emphasise how your design services can address specific client needs. Start your social media journey with “9 Social Media Ideas + Examples For Interior Designers: By A Community Manager”.
Collaborate with Complementary Professionals
Form strategic partnerships with architects, contractors, real estate agents, or property developers. Collaborating with professionals in related fields can lead to referrals and joint projects. By leveraging each other's networks and expertise, you can expand your reach and access new opportunities.
Enhance Cost-Effectiveness
There are so many ways to be more cost-effective without sacrificing quality. From working on your time management to adopting operational changes, you can cut costs easily. Read more in our article “How To Increase Profits As An Interior Designer Without Compromising Quality”.
Invest in Professional Development
Use the downtime during a recession to invest in your professional development. Attend industry conferences, take relevant courses, and stay updated on emerging trends and technologies in interior design. Upskilling and expanding your knowledge can make you more competitive and adaptable to changing client demands. For example, you could develop your graphic design skills, or perhaps even create a small business that helps you get another stream of income.
Build an Emergency Fund
This is a “hindsight is 20-20” point. However, it is important to say. During periods of economic growth, set aside a portion of your earnings as an emergency fund. Having financial reserves can provide a buffer during lean times and help cover essential business expenses.
If you're more of a visual learner, you should watch this video.
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