The cost of living crisis has had a dramatic impact on consumer spending with brands needing to focus on value and the longevity of their products to win customer loyalty.
These were some of the key findings from a new research report by marketing agency Gekko.
The survey of 2,165 British respondents carried out by YouGov in August commissioned by Gekko, revealed that two thirds, 66% have cut back spending on “considered purchases.”
These are defined as non-essential purchases that have a degree of financial or emotional investment.
Meanwhile more than 4 in 10 (43%) of people have cut back on spending on “essential household items” due to the increased cost of living.
The re-considered purchase
For considered purchases, 52% of 18-24 year olds have cut back on spending, compared to 68% of 25-34 year olds and three quarters (75%) of 35-44 year olds.
The categories hit hardest by a cut back in spending of consumers of these goods are: Consumer electronics and homeware and home furnishings with 61% of consumers of these goods reducing spending.
Next was Clothing & apparel 60%, DIY and garden, 50% and Baby and child, 41%.
In today’s environment the number one factor making people consider a purchase in the consumer technology space is that something is within budget, 69%, durability/ being fit for purpose was next, 52%.
Third in the list was sustainability, still favoured by 23% of respondents. Brand awareness was considered by just 13% of respondents.
For Gen Z (18-24 year olds), the result for sustainability was far higher at 38%, suggesting the need for a tailored approach for brands to remain relevant in the current environment.
Consumers cutting spending on essential items
For essential household items, more than 2 in 5 respondents revealed they had reduced their spending (43%). Of these, 1 in 3 (32%) have cut spending on essential household items by more than 15%. 3% have cut spending on essential items by more than 50%.
There are some significant variations, based on gender, location, age and financial situation. 48% of women have reduced spending on household items, vs 38% of men.
Of those who have reduced their essential household spending, home owners (of any type) are the most affected, with 63% saying they had cut spending by up to 15%, compared to 51% of renters.
Londoners are least likely to cut spending significantly. Of those who have reduced their spend on household essentials, just 2% of Londoners are cutting spending by more than 50%. Meanwhile in the East of England this rises to 6%, and 7% in the North West.
Millions of consumers looking to switch brands
Brand loyalty has plummeted in the current climate. 60% of people would switch brands for essential items and 48% of people revealed they are more likely to switch non-essential considered purchase brands. Men are less likely to consider switching their considered purchase brand choices, 43% versus 52% of women.
Daniel Todaro, Managing Director of Gekko said, “The results highlight the dramatic but also the uneven impact of this cost of living crisis. There is certainly no generic strategy for brands wanting to remain relevant in the current economic climate.
“These huge variations in choice are clearly based on income level, age, gender and location. No longer is desire beating need when making choices.”
He added, “While large numbers of people are being seen to be cutting spending on considered purchases, it is now implied that brands should focus on price and durability as the two key factors driving buying decisions.
“Ephemeral qualities like brand values seem less important in today’s climate. However it is important for brands to have expertly crafted messages for different audiences with sustainability still crucial, in particular for younger audiences.
“Having the right tone and audience-centric approach may assist brands in weathering the turbulent times predicted ahead.”