Waitrose and Sainsbury’s will be hit by change to child benefit

Waitrose, Sainsbury’s, Tesco and travel firm TUI are among the brands likely to lose sales as households trade down to cheaper brands to offset income lost from changes to child benefit for households earning more than £50,000, according to data firm Acxiom.

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More than 1.1 million households with a single income of more than £50,000 a year are facing reductions in child benefit. The initiative is set to save Government and taxpayers more than £1.5bn next year.

A report by Acxiom highlights that a UK household with three children under 16 and a single income of £60,000 to £65,000 could lose up to £2,449 every year in child benefit payments.

Average basket size at these supermarkets is expected to shrink as affected families rein in spending to account for reduction in benefits payments.

Holiday brands Thomson and First Choice can also expect a drop in revenue, according to the data, as families hit hardest have previously taken up to three holidays a year.

Charities including NSPCC, Save the Children and Amnesty International are also likely to see a drop in donations, the data revealed, as organisations supporting child welfare, Third World causes and disaster relief are most likely to have attracted donations from affected households.

The change comes into effect today (7 January) making child benefit means tested rather than universal.

Jed Mole, European marketing director at Acxiom, says: “People with three of more children will find ways ways to cut back on expenditure just to stand still financially and that could be bad news for brands that will now be seen as nice-to-haves rather than must-haves.”

He advises brands likely to take a hit to use data to analyse which customers are more likely to curb spending on their products and services and develop marketing that will make them think again.

Mole adds that while the changes may squeeze mid and upscale brands, it provide an opportunity for more budget oriented brands to target consumers that are facing benefits reductions with offers that appeal to the new need to cut costs.

Acxiom analysed its nationally representative InfoBase database and Personicx consumer classification system to identify where consumers hit by the changes were likely to shift their spending and which brands were most likely to miss out.

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