Changes in behaviour as a result
Consumers are reacting to these new pressures by reducing spending, with at least one in five customers doing so in all categories. The most severe cutbacks are taking place in discretionary categories such as clothing, where 57% of consumers are reducing how much they spend.
Such behaviour differs by age, with younger consumers cutting back more severely than older consumers, possibly because they have fewer obligations, such as family or mortgages, that older consumers may have.
We also see UK consumers switching to lower-cost alternatives, the latter a particular trend amongst Millennial and Gen X consumers. Despite this, we have not seen a significant increase in consumer willingness to purchase own-label alternatives.
The impact of the strain on finances, as well as the issue of availability, is fuelling stockouts, either because products aren’t available or consumers are stockpiling. More than one in four (28%) admit they are stocking up to avoid running short of groceries in the future.
When consumers encounter products that are not available, a third (34%) of the time consumers have bought an alternative brand or product. However, there is more abortive behaviour brewing too. 13% of the time consumers switch to a different store for the product, 16% of the time they delay their purchase and 15% of the time they simply don’t buy.
A lifeline comes from the consumer’s willingness to share data
Such challenges make engaging with the customer and convincing them to buy tougher than ever. But UK consumers want an easy life. For example, 1 in 4 (25%) of consumers are considering automatic subscription services, up from 20% year on year.
And they are willing to share their data to achieve that easier, healthier and cheaper shopping experience.
- 68% will share data for cheaper product recommendations, up from 63% year on year
- 60% will share data for automatic replenishment of their shopping cart, up from 48%
- 60% will share data for easier or more efficient purchases, up from 56%
Tips for engaging with consumers regaining control
As consumers take back control of their lives, shopping more sustainably and with greater considerations of affordability and the world around them, retailers and brands need to be ready to meet their needs.
The emerging trend in our previous FCI continues. These are UK consumers looking to buy less but buy better quality. They want to own less but experience more. And they have more focused goals around sustainability and affordability. Almost half (48%) are buying less to save money, but 44% have realised they simply don’t need so many physical items. One in five (21%) will invest more in better quality items.
In order to deal with this changing consumer mindset and values, we suggest brands and retailers should focus on three key areas:
1. Refresh and strengthen value
Effective price architecture and tiering of ranges will be vital, with brands and retailers needing to reiterate their value messages and strengthen their value and own-label ranges in order to serve the needs of the more value-focused consumer.
2. Invest in differentiation
A customer who is less reluctant to spend will require convincing, so investing in differentiation that focuses on the continued growth in appetite for health and sustainability offers a key opportunity.
3. Accelerate new business models and user experiences
Whether it’s moving to a D2C model or introducing subscription models, consumers will appreciate any moves that make life simpler, cheaper and easier. They may be regaining control, but brands and retailers still have a role to play in helping them through the uncertainty ahead.