Research by WPP media agency Mindshare UK indicates long-term economic change as depth of customer reaction to the cost of living is revealed.
The study, Going for Broke?, part of Mindshare UK’s ongoing Reality Check Programme, has found a rise in thrift and reduced consumption could become the norm, as 84% of Britons are either making – or expect to make – cuts to their consumption of fuel, food, entertainment, borrowing and travel. With just 16% of people believing they can ride out of the cost-of-living crisis with minimal or no change to their everyday lives.
Energy and fuel prices, followed by inflation and the war in Ukraine were listed as the top concerns, with women more anxious across the board overall. While under 35’s with lower incomes showed more solicitude, even those from higher incomes households are worried – with four out of ten people anxious about providing for their family, depleting their savings, or not having enough to retire.
In order to help ease cost-of-living concerns, people’s habits and behaviours are having to adapt in response to these turbulent times. Five different types of activity are now emerging to help relieve some of the strain.
The highest levels of adoption can be seen around reduced usage. This covers everything from turning down the heating – something that half of us have already done – to managing food waste better, to using less hot water, to simply trying to make things last that little bit longer.
Shaped by changing habits, the study reveals people are switching and looking for alternative ways to live to help manage finances. 9 in 10 expect to cook at home more instead of eating out, and 8 in 10 under 35s are reconsidering how they commute.
Shopping wiser is also a tactic emerging, with 9 in 10 of us expecting to try and stick more tightly to a budget and bulk buying is likely for nearly three quarters (72%) of us. Meanwhile, 85% will be on the lookout for cheaper alternatives when shopping, rising to over 9 in 10 (92%) amongst lower income households.
For some, finding alternative incomes to increase the money coming in is another area of adoption, particularly amongst younger age groups. Nearly two thirds are considering overtime, or getting a second job to make ends meet. And, almost three quarters are thinking of selling the things they no longer need.
Deferred debt. While there are many changes people are willing to make to relieve some of the strain, there’s some measures we are reluctant to take. Least likely to be adopted are those activities which push money worries to the future such as relying on credit cards, deferring mortgage payments and borrowing money.
Long term vs short term goals
Mindshare UK’s research found that the cost-of-living crisis is also having a significantly negative impact on big life decisions. The things that bring people joy and higher life satisfaction even before Covid i.e buying a house, getting married, having kids, are now being put off and for some, even taken off the list altogether. With over half (52%) of people agreeing some of their life goals will have to take a back seat during this crisis.
Holidays in the UK and abroad, changing jobs and saving money are now the top priority areas for short-term actions, with 47% of respondents agreeing they are now much more short-term focused with their plans.
Despite the growing concern, 56% of people revealed they still want to make sure they are enjoying life regardless of the rising cost of living.
Brand loyalty called into question
Mindshare UK’s research also suggests that brand loyalty is really being called into question, regardless of people’s financial status. Six in 10 people agree that as much as they love their favourite brands, if money is tight, they will have to stop spending with them – this raises to seven in 10 for lower income households and is only set to increase and become more widley adopted by eight in 10 over the next few months.
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.
Brand association in these sectors are also shifting in line with this, with many values such as popularity, innovative and a big household name, now mattering far less in the selection process. However, knowing a brand was a “safe choice” was a key exception to the rule, with people seeking reassurance for previously untried choices.
When it comes to discretionary spending, 45% are reducing non-essential expenditure, with the biggest cuts seen in eating out, buying clothing, takeaways, beauty services and leisure, and things such as news/magazine subscriptions (22%) and entertainment outside the home (17%) spending being cut completely.
While shoppers will not be offering brands much in terms of loyalty, their expectations around what brands should be providing in return remain high. However, there is a sense that not much is on the table currently. Confidence remains low that brands are doing anything active to alleviate price increases, with older audiences the most cynical.
Seven in 10 of those aged 45+ agree that they see very few brands trying to swallow the price increase and instead pass it onto the shopper, with 62% of those aged between 45-54 believing brands should now be sacrificing their profits to help people manage the cost of living crisis.
However, If brands cannot lower their prices, people expect them to offer relevant deals (45%), reward loyalty (36%) and be honest, transparent, and trustworthy (31%). Values related to sustainability are also coming through in the top six, in terms of making products go further, helping consumers reduce waste and also looking after the planet – these expectations are the same regardless of financial status.
The study further suggests that advertising that pretends the world is fun and everything is ok shows a brand is out of touch with reality (58%), with 62% of respondents stating that brands cannot get away with saying one thing and doing another.
“What’s hugely significant from this research is just how widespread this crisis is” said Julia Ayling, Head of Research & Insights, Mindshare UK. “Everyone is changing their behaviours, even those who are more financially positive. Behaviour change is underway now, with many of us cutting back spending or changing shopping habits where we can, and levels will only increase as the crisis deepens.
“As a result of the pandemic, people’s overall life priorities have shifted away from materialistic values such as eating out, shopping, treats and purchases, to more altruistic values that celebrate spending time with family and loved ones, our health and wellbeing, as well as financial security. The cost of living crisis is reinforcing this change even further.
“In an age of uncertainty, brands shouldn’t sugar coat reality or appear out of touch with the struggles people are facing. Honouring loyalty, demonstrating honest and trustworthy values are more likely to be welcomed. And sustainability still matters for many, irrespective of financial status, with behaviours going hand in hand with helping people to save money.”