Cost-of-living crisis driving long-term behavioural shifts.
The UK’s cost-of-living crisis is predicted to have a long-term impact on consumer behaviour, with younger shoppers most affected from the current pricing pressures as they shift to buying more second-hand goods and seeking out the best deals.
The recently published ‘The Constrained Consumer’ report from Webloyalty and CEBR (Centre for Economics and Business Research) includes a survey that found a significant 84.3% of the population stated that at least one of the behavioural shifts they have made during the cost-of-living crisis will become a long-term habit.
These shifts in shopping behaviour have affected 58% of the adult population and from these 62% are now comparing the prices of different retailers more often and 44% have become more promiscuous with their shopping activities as they visit a much broader spectrum of retailers.
It is younger shoppers have made the most striking changes, according to the survey, with 46.8% more likely to shop for second-hand goods compared with 32.9% of the older grouping, and 60.7% state they are making better use of online resources compared with 48.1% for the wider sample.
This price-conscious activity is contributing to increasing pressure on retailers who have cited pricing-related issues as their current major challenges. The survey found 40.9% of retailers stated competing on price as their main challenge, which was followed by overhead costs (38.2%), supply chain issues (35.2%) and squeezed margins (25.9%).
Against this backdrop 85% of the population is using at least one rewards/loyalty/cashback-type programme, with the average usage once every 3.2 days. Supermarkets have the most widely used programmes, with 75.7% of shoppers using them, compared with much less usage within other retail categories – with clothing and footwear, gardening, homewares and technology/appliance companies all reporting less than 30% usage by shoppers.
It is calculated that these loyalty programmes influence as much as £74.9 billion of consumer spending in the UK, which equates to 4.9% of overall consumer expenditure. The fact that as much as £34.1 billion of this amount is related purely to the supermarkets suggests that the non-food retailers are potentially missing out on using loyalty/rewards tools to drive extra sales.
With only 31.3% of retailers currently using such a solution, and a further 20.5% having considered implementing one over the past year, there is undoubtedly an opportunity for more retailers to investigate the use of these tools to combat the ongoing tough inflationary landscape.