As the cost-of-living crisis continues consumers are looking to change their spending habits.
From cutting down on TV streaming services to foregoing a favourite coffee at a local café, people are expecting to significantly change their spending patterns when it comes to non-essential items over the next 12 months.
We teamed up with YouGov to identify where these changes will be made – and to what degree – using three Mosaicâ„¢ household groups to highlight the potential impacts.
We look at holidays, household items, and things like takeaways, eating out, and TV streaming services: helping retailers better spot which categories are likely to be affected.
Consumer Demographic Definitions
In this piece, we consider three separate demographics:
Group B: “Prestige Positions” – These are established families in large, detached homes living upmarket lifestyles.
Group H: “Aspiring Homemakers” – These are younger households settling down in housing priced within their means.
Group I: “Family Basics” – These are families with limited resources, who budget to make ends meet.
A Place in the Sun: How Spend on Holiday Will Change
Holidays
| B | H | I | |
| Not reduce at all | 40% | 21% | 13% |
| Reduce Minimal to Moderate | 30% | 34% | 18% |
| Reduce significantly or Stop spending completely | 21% | 26% | 36% |
Participants had varied responses when asked if they would reduce their spending on holidays. Over a third of Group B respondents – those living more upmarket lifestyles – said that they would not be looking to reduce their spend at all, whereas Group I, those who budget to make ends meet, were the opposite.
Over 35% of respondents from this group said that they would either significantly reduce spend, or stop spending completely. The most frequent response from Group H, the Aspiring Homemakers, was that they would be most likely to either minimally or moderately reduce their spending, but would be unlikely to spend as normal, or cut out holidays completely.
Home is Where the Heart is: Household Shopping Habit Shifts
Household Soft Furnishings
| B | H | I | |
| Not reduce at all | 26% | 12% | 10% |
| Reduce Minimal to Moderate | 23% | 23% | 18% |
| Reduce significantly or Stop spending completely | 32% | 42% | 57% |
Household Appliances
| B | H | I | |
| Not reduce at all | 23% | 16% | 10% |
| Reduce Minimal to Moderate | 31% | 15% | 18% |
| Reduce significantly or Stop spending completely | 29% | 44% | 57% |
Household item spend is looking very likely to shift – almost every group’s majority response suggests that they will either significantly reduce spending, or stop spending completely on both soft furnishings and appliances.
The only minor outlier is Group B, who are only slightly more likely to reduce their household appliance spend than those respondents who said that they would significantly reduce or completely stop spending. Less than 25% of Group B respondents said that they would spend ‘as normal’ on appliances.
In both categories, almost two-thirds of Group I – those families who budget carefully – will either eradicate spending on both household soft furnishings and appliances, or reduce their spend significantly.
TV Dinners: How TV Subscriptions, Takeaways, And Restaurants Might be Affected
TV Streaming
| B | H | I | |
| Not reduce at all | 30% | 23% | 35% |
| Reduce Minimal to Moderate | 35% | 47% | 32% |
| Reduce significantly or Stop spending completely | 17% | 19% | 25% |
Restaurants
| B | H | I | |
| Not reduce at all | 22% | 11% | 8% |
| Reduce Minimal to Moderate | 43% | 44% | 26% |
| Reduce significantly or Stop spending completely | 26% | 33% | 49% |
Take away Meals
| B | H | I | |
| Not reduce at all | 14% | 5% | 7% |
| Reduce Minimal to Moderate | 29% | 38% | 33% |
| Reduce significantly or Stop spending completely | 31% | 40% | 42% |
As grocery bills are set to soar by £533 this year2, it’s perhaps little surprise that both eating out and having takeaways are things that consumers plan on reducing their spend on.
In an interesting pattern shift, Groups B and I both state that they are most likely to significantly reduce or cut their spend on takeaway meals, but almost 40% of Group H say they’ll opt to only reduce this moderately or minimally.
Restaurant spend is something that nearly half of Group I will reduce drastically or cut out completely – unlike Groups B and H, where the majority of responses again indicate that these customers will reduce spend minimally or moderately.
It does seem that all these groups might be partial to a TV dinner, however, as well over a third of all respondents either plan to maintain their spend on streaming services, or reduce them only a little.
Find and Fill the Gaps in your Customer Data
When it comes to accurately predicting customer behaviour, data like this is just one piece of the puzzle.
Yes, it’s true that understanding where people plan on changing their spending habits is helpful, but to best serve customers and increase their confidence, retailers will need to go further.
By identifying the gaps in consumer insights, retailers can give their marketing an edge with more accurate information and data-driven predictions. A good place to begin is with a core persona profile, offering brands far more insight into where their most profitable customers are, what they buy, and who buys which products.
Not only are customer personas frequently very different to in-house preconceptions, but tracking shifts in customer personas helps retailers to understand how behaviours are changing and to respond proactively.
Considering things like shopper mobility – or more literally, where your customers are going and why – is also crucial. With more people working from home than ever before, consumer travel habits are shifting, but it isn’t as simple as assuming certain stores are under or overperforming due to footfall.
Where there may be fewer in-store shoppers in terms of volume, there are ways retailers can maximise their opportunities to upsell to the right consumers, aided by other metrics like basket size or total basket value.
Although our findings do show that the increased costs are weighing heavily on the minds of many groups, the intention to cut back slightly or carry on as normal still exists for a significant proportion of the population.
The key message has to be to ensure that as retailers, offers and products are targeted to the right groups at the right price points, to ensure you make the most of your advertising spend.
This means that gathering data-driven insights about shopper habits can give retailers a competitive advantage, especially when it comes to strategic decision making around location planning, advertising channels and customer frequency, loyalty levels, and more.
A detailed analysis often unearths many other key metrics, but clarifying the core needs of your customer is always the best place to start.
What Next?
The good news is that you don’t have to be a data scientist or have a team or professionals data gurus to start on this discovery journey! Your marketing team can begin implementing these findings directly, focusing budgets on the right areas.
Of course, this is a constantly shifting space, so making sure your research is continuous and ongoing will help keep your finger on the pulse of changing attitudes and behaviours – and support more strategic decision making.
To find out how we can help you get started or to understand more about customer behaviour and latest attitudes, contact us today at businessuk@experian.com.
Sources
[1] Inflation, Interest Rates & Economy: Euro Bank Imposes Record Rate Hike In Bid To Tackle Inflation, Forbes
[2] Annual grocery bills in Great Britain will soar by £533, experts predict, The Guardian