UK shoppers to cut back

06 May 2011

LONDON: Consumers in the UK are set to reduce their expenditure levels over the coming four years, a trend even applying to the most affluent shoppers.

Agency RAPP and research firm the Trajectory Partnership surveyed 2,000 people, combining the findings with data from the Office of National Statistics and Institute for Fiscal Studies to assess probable spending in 2014-15.

They reported the country's highest-earning households, boasting an annual income of £62,000 or more, will have trimmed outgoings on goods and services by £2,700 by this date.

"Affluent families are really going to feel the pinch," Gavin Hilton, director of customer experience at RAPP, told Marketing Week.

"If you've got a product aimed at affluent families, you'd better understand exactly what's important to them because those are the people who are going to be delaying, cutting and spreading costs with rigour."

The next rungs down on the scale will log declines of £1,219 and £944 in turn, while the least well-off segment are anticipated to be making annual reductions of £533 at the end of the forecast period.

In percentage terms, these totals constitute a 6.5% decrease among the richest group and 4.6% for the poorest, as residences in the middle lodge slides of between 3.2% and 3.6%.

Families with children are pegged to slash expenses by £31.12 per week, standing at £7.05 for pensioners and £16.79 for the remainder of the population, averaging out at an £18.32 depression.

Private education may be worst hit, off 9.4%, measured against the 6.5% contraction recorded by healthcare, while restaurants and hotels returns tumble 5.8%, a figure attaining 5.6% for recreation and culture.

Transport could witness a 4.6% dip, an amount reaching 3.5% concerning household goods, 2.9% when discussing communications and 2.5% regarding clothing and footwear.

Housing, fuel and power are collectively projected to observe a 2.2% deceleration, compared with a 2% decline for alcohol and tobacco, and a modest 1.5% decrease for food.

In a breakdown of actual spending, recreation and culture will endure a drop of £3.39 a week, as out-of-home dining and holidays suffer similarly sharp depreciations.

Overall, 61% of participants suggested their outgoings would fall, with factors like government cuts exerting a negative influence.

Turning to the current situation, 36% of interviewees have recently looked online for vouchers and discount codes, and 28% are now frequenting supermarkets believed to offer the best prices.

Some 15% of panel members are splashing out greater sums on home entertainment, for example pay-TV, which is often perceived as a "treat".

"Everyone is putting time and energy into saving money. Marketers need to understand the decision-making criteria of their audiences," said Hilton.

RAPP cited various new habits, like "smart" and "swap" approaches, or thorough analysis of purchases and a willingness to trade, say, a meal out for a “stay in” dining promotions from supermarkets, respectively.

The "manage" trend has seen the proactive adoption of behaviours such as seeking deals, and the shift towards a "downgrade" viewpoint is benefitting discounters Aldi and Lidl.

"Experience" is also becoming more important than ownership, resulting in strategies including renting a car for periods as short as an hour.

Data sourced from Marketing Week; additional content by Warc staff