Brits batten down for coming storm

Only 16% of Britons are confident they can ride out the cost-of-living crisis, with 84% making cuts to their consumption of fuel, food, entertainment, borrowing and travel, according to research by Mindshare UK 

Context 

The media agency’s Going for Broke? study was published on the same day that Unilever revealed it had hiked prices by 8% in Q1 and flagged further inflation in the second half of the year and that Chancellor Rishi Sunak warned of interest rate rises and an additional £1,000 a year on mortgage payments. 

Changing habits

Five different types of activity are emerging to help relieve some of the strain: 

• Reduced usage. This covers everything from turning down the heating to managing food waste better, to simply trying to make things last that little bit longer.
• Switching. People are looking for alternative ways to live to help manage finances – 90% expect to eat out less and eat at home more, for example. 
• Shopping wiser. Nine in ten people expect to stick more tightly to a budget and to look for cheaper alternatives when shopping. Bulk buying is likely to increase.
• Alternative incomes. Nearly two thirds are considering overtime, or getting a second job to make ends meet; almost three quarters are thinking of selling the things they no longer need.
• Deferred debt. People are reluctant to take actions that just push money worries to the future; they’ll try to avoid relying on credit cards, deferring mortgage payments and borrowing money.

What it means for brands

Brand loyalty is being called into question, regardless of people’s financial status. The food shop, cleaning/homecare and the supermarket used were mentioned by over half of the population as sectors where they were likely to switch in the future, or where the switch to the cheapest alternative had already happened. A brand’s popularity now matters less than whether it’s a “safe choice”, as people seek reassurance for previously untried choices. 

Almost half (45%) are reducing non-essential expenditure and there’s little confidence that brands are doing much to alleviate price increases. 

Brands shouldn’t gloss over the current situation in their advertising, as six in ten say that shows a brand is out of touch with reality; a similar proportion observe that brands can’t get away with saying one thing and doing another. 

Sourced from Mindshare, Financial Times, Independent [Image: Getty]