The recession is not only affecting how people buy now but also their future long-term spending, according to a report from agency Shoppercentric. Buyers are adopting cautious spending strategies that may well become ingrained behaviour, leading to new challenges for marketers.
Ninety per cent of UK households are employing more prudent buying strategies, an increase of 4% from research the agency carried out in January. While the results from the start of the year were seen as a knee-jerk reaction to the economic downturn, this prudence now appears to be an ongoing trend.
Shoppercentric managing director Danielle Pinnington explains: “The prudence trend seems to be growing at quite a pace. Economising, which is specifically about price, has actually fallen since January, whereas prudence has increased.
“It seems that, over time, the initial reaction has developed into people realising they can save money by being less wasteful or avoiding temptation. The longer-term outcome seems simply to be people learning to be more sensible.”
“Prudent” activities include consumers making things go further, being more careful about avoiding waste and avoiding upmarket shops that are known to be more expensive. Also significant is the increasing role of the internet in helping buyers shop like this, with 38% sourcing vouchers online and 78% of those doing so claiming that this is a change in their behaviour from just 12 months ago.
Pinnington speculates: “There is a possible trend developing in vouchers and coupons. People are becoming very savvy about that, particularly via the internet. They are becoming quite aware and starting to take advantage. It seems they are willing to do more planning and storing up benefits for later.”
This move to cut costs is despite some positivity in consumers’ personal situations. Compared with figures from January, those who believe they won’t be affected by the recession has increased by 2% to 6%.
If this apparently small shift is extrapolated to the main grocery shoppers in the UK, it equates to more than 500,000 consumers feeling more confident than they did in January.
But Pinnington warns: “It’s tempting to view the increase as sign of a ‘green shoot’, but at the opposite end of the scale there has been a 2% increase in the proportion of consumers who have had to make major changes to their household spending, or are struggling to pay the bills. It seems that for each shopper who is feeling more confident, there is another who is feeling the pinch.”
Aside from prudence, the research suggests that consumers are now adopting another three distinct shopping strategies. Ninety per cent – a rise of 4% – of respondents say they are saving money by avoiding waste, planning their meals better and making more meals from scratch.
The knee-jerk, price-focused reactions to the recession seem to be decreasing. While 88% are still buying own-label products and are more aware of pricing, there has been a 4% drop in this tactic since January. Down 1% in the last six months, too, is “active shopping” – a term used to encompass consumers using stores they have never been to before, checking prices online and going to where the best deals exist.
Meanwhile, a strategy that may prove a longer term trend is that of ignoring the more expensive shops and avoiding temptation; this has risen by a single point to 88%.
Pinnington observes: “The really interesting thing is that these trends can become ingrained behaviour and may remain after the recession has ended. Even over just a few months we are already seeing a hint of that.
“Economising is dropping and actively switching stores is falling very slightly, whereas prudence and avoidance are the things that are on the increase,” she says. “It does feel like when we get out of this horrible situation we will all be more sensible shoppers as a result.”
In terms of behaviour around specific marketing promotions, 79% take note of the ever-popular buy-one-get-one-free (BOGOF) offers, while 69% are looking for money off single items, an increasingly appealing promotion reflecting the need for many to keep to a specific budget.
Also arguably related to the concept of prudence is that 47% of respondents are using vouchers and coupons, and saving them for a later benefit. Less common promotions on groups of products, such as “meal deals” or “dine in for £10” are being sought out by 21%, which may be of interest to those supermarket marketers using them. These are attractive to the retailers because they encourage greater spend across a range of items that consumers might want in any case.
It’s not just about throwing promotions at people, rather it is about considering what their situation is and arriving at the best solution for their needs
Danielle Pinnington, Shoppercentric
The research found the most popular voucher promotions to be those coming from a loyalty card mailshot or instore terminal (53%). Fifty-eight per cent of the people using these are using them more than they did last year. In second place is a voucher from a product pack with 35%, up 61% on last year.
There are also signs from the research that consumers may become less suggestible to more obvious marketing ploys. However, opportunities for clever marketing still exist, Pinnington believes.
“It feels like marketers will need to become more creative,” she says, “It’s not just about throwing promotions at people, rather it is about considering what their situation is and arriving at the best solution for their needs.”
Pinnington highlights that one of the themes that comes across in the research is the feeling that stores have become too reliant on promotions, leaving consumers feeling “crowded out” and confused by a plethora of offers.
She says: “Perhaps some retailers are missing the bigger picture.” She suggests retailers look for clever ways to engage with consumers and cites the Sainsbury’s Feed Your Family for a Fiver, as a good example. “It’s promotion,” she says, “but Sainsbury’s is coming at it from a different angle and offering a solution. That kind of creativity feels like it is lacking generally and that’s the thing that manufacturers and retailers will have to turn their minds to.”
Building brand loyalty may be difficult at the best of times, but the news that consumers are cutting down on knee-jerk brand switching because of price is surely good news for marketers. Getting creative enough with promotions to convince people to break out of their prudent mindsets in the first place will, it appears, take a little more work.
How many UK consumers are sourcing vouchers online
How many consumers who source vouchers online say that this marks a change in their usual behaviour
How many UK consumers use vouchers from loyalty card mailings and instore terminals
We ask marketers on the frontline whether our ‘trends’ research matches their experience on the ground:
Marketing director at Sara Lee Household & Body Care UK
Shoppers are definitely being prudent but as store choice is often driven by geographical proximity, we’ve found that, rather than switch shops, consumers are saving money by making more savvy product choices and using relevant promotions.
They’re also making one big shop rather than a series of smaller shops. This behaviour has driven a shift from multibuys to price cuts; mirrored by retailers, which are communicating price savings rather than buy-one-get-one-free.
In toiletries and cosmetics, the majority of shoppers are spending the same. Brands are suffering in commodity areas such as water, biscuits and toilet paper, where consumers are switching to own-label.
We’re also finding that consumers want to hear brand communications in a manner and tone that is sympathetic to the current environment. Going forward, we need to ensure that innovation continues to deliver good quality at the right price.
Senior marketing manager at Kellogg
Shoppers’ habits have changed. They are being prudent and seeking value for money, so it’s good to see this research echo that. However, value doesn’t always mean low prices, and this comes across in this study. That’s why earlier in the year Kellogg introduced larger-sized packs of our most popular cereals.
Like the research, we’ve seen shoppers become hungry for voucher promotions. With this in mind, we recently launched a free cereal promotion run on pack and online with the aim of rewarding consumers for being loyal to Kellogg.
The research provides a warning to brand managers. If 500,000 shoppers are feeling more confident than in January, marketers need to start getting ready for any upturn.
Long-term brand equity building programmes, not just recession beating plans, need to be front and centre to navigate the current climate and ensure your brand remains relevant when the economy warms up.
Managing director of Saclà UK Ltd
The Shoppercentric survey is far too general and somewhat inconclusive. I agree that people are becoming more prudent, but believe this is bringing out the best in us – more cooking from scratch, eating together as a family and using more local seasonal produce.
It is incredibly difficult to generalise about which promotions work best for everyone. It depends on the product, the retailer and the demographics.
At Saclà, we are focusing on maintaining customer loyalty – it’s about offering great value for money and that comes from a combination of price, promotions and product.
Our target audience is looking for inspiration, so we offer a broad innovative range, with the emphasis on great quality.
In conclusion, there is nothing radical here: everyone behaves differently [from each other] and it can be dangerous to generalise. We are all a little apprehensive these days but this change in shopping behaviour could be a change for good for all of us.