Consumers turn to own brands and price promotions to manage cost of living, survey says
Over half (55%) of UK consumers say they have cut down their non-essential spending so far in 2023, according to the latest KPMG Consumer Pulse survey, with 38% identifying rising utilities costs as their biggest spending deterrent in the next three months.
Asked how their shopping behaviours have changed so far this year, 37% of the 3,000 consumers surveyed say they have been buying more own brand or value range products. Almost as many (36%) are buying more promotions or discounted items, while a third are buying fewer products.
The same proportion (33%) say they are spending more time looking for bargains, while 31% are switching brands and 29% are switching to cheaper retailers. More than one in 10 are spending more on credit.
According to the survey, consumers are cutting back on eating out the most (63%), followed by takeaways (55%) and clothing (54%). The least affected categories are children’s clothing and toys (11%), pet products (12%) and meal delivery kits (15%).
Four in 10 (41%) are yet to purchase any ‘big ticket’ items so far this year, with 34% saying they won’t make one this year at all. Of those who do plan to make a major purchase, 28% plan to make a home improvement purchase, while 26% plan to buy a holiday. Some 17% plan to buy a home appliance, 13% expect to buy home electronics, and 12% plan to buy a vehicle.
Consumers’ top two considerations when purchasing goods and services this year are price (79%) and quality (69%). Following some way behind are sustainability (30%), convenience (24%), loyalty benefits (20%), customer experience (10%), ethics (4%), and data privacy (2%).
Discounters boost TV investment as they look to maintain market share momentum
Aldi and Lidl have doubled down on TV advertising as they continue to capitalise on consumer demand for cheaper groceries, with the two discounters both spending more on the channel than any other UK supermarket in January this year.
Aldi is the biggest spender for a second year, according to Nielsen Ad Intel data provided exclusively to Marketing Week by TV marketing body Thinkbox. The discounter boosted its linear TV spend by 17% compared to the same month last year, from £2.9m to £3.4m.
Lidl increased its spend by 36%, from £1.7m to £2.2m. While last year the discounter was the fourth biggest linear TV advertiser among the UK’s supermarkets, it now represents the second largest spend.
Tesco, the UK’s biggest supermarket, comes in third with spend of £1.6m in January – less than half Aldi’s spend. Meanwhile, Sainsbury’s drops from third to fourth place with spend of £1.55m, and Asda falls from second to fifth, with spend of £1.1m.
Source: Thinkbox/Nielsen Ad Intel
Brands overestimate impact of personalised comms
UK consumers report spending 15% more with brands that personalise engagements. However, this is lower than companies believe it is, with brands themselves putting the figure at 41%.
Indeed, brands are reportedly overestimating how well they are meeting consumer expectations for communication preferences, protecting customer data and transparency.
Just over half (51%) of consumers say they will stop using a brand if it doesn’t personalise their customer experience by taking into account their needs, expectations and preferences.
Consumers are also getting more frustrated by brand interactions, with 48% suggesting they have been annoyed by communications from companies over the past year, up from 44% the year before.
Nearly three quarters (71%) say their loyalty to brands does increase if they are sent more personalised communication. However, UK respondents are the least loyal, suggesting brands need to work harder to engage consumers in this market.
Culturally salient campaigns have biggest impact on business performance
More than half (53%) of campaigns that earn coverage and conversation are more likely to drive “very large” business effects and 2.6 times more likely to achieve sizable profit growth.
The Earned Effect Study, which was conducted by The Weber Shandwick Collective in partnership with the IPA, looked at the impact of campaigns that earn coverage and conversation on business performance. It analysed culturally salient campaigns – those that earned coverage and conversation over at least nine months thereby contributing value to people and communities – versus those that are deemed non-culturally salient over a 10-year period.
Culturally salient campaigns outperform other campaigns with 57% driving very large sales gains and 40% driving very large market share gains.
It also discovered those brands worthy of earning attention and activating – not simply reaching – communities saw a 42% uplift in ROI and outperform peers in every brand health metric.
Campaigns that earn coverage and conversation are also 75% more likely to create halo effects across other products in the franchise.
Source: The Weber Shandwick Collective/IPA
Lidl overtakes Aldi as the UK’s fastest growing supermarket
Lidl was the UK’s fastest growing supermarket in the four weeks to 19 March, with sales up by 25.8% compared to the same period last year. The discounter grew its market share from 6.4% to 7.4%, according to the latest grocery market data from Kantar.
February’s fastest growing supermarket Aldi grew its sales at a marginally slower pace than its rival in March, up 25.4% compared to a year prior. However, the discounter secured a new record market share at 9.9%, up from 8.6%.
The growth recorded by both discounters comes as grocery price inflation continues to rise, putting further pressure on consumers’ budgets. Inflation rose to 17.5% in March, a new record based on Kantar’s market data. This means households are now facing an £837 increase in their annual shopping bills.
Iceland was the only other supermarket to increase its market share in March, up 0.1 percentage point to 2.3% after a 9.6% sales jump.
The UK’s biggest supermarkets, Tesco, Sainsbury’s and Asda, grew their sales at a more moderate pace, with Tesco and Sainsbury’s both up 6.9% and Asda up 7.3%. All three grocers claim a smaller market share than in March 2022, with Tesco holding 26.9% (down from 27.4%), Sainsbury’s holding 14.8% (down from 15.1%) and Asda claiming 14.3% (down from 14.5%).
Morrisons, which was knocked off its spot as the UK’s fourth largest supermarket by Aldi last year, saw sales return to growth in March, up 0.1%. The supermarket holds a market share of 8.8%, down from 9.5% in March 2022.
Meanwhile, Waitrose delivered its fastest rate of growth since September 2021 at 2.1%, although its market share is still down 0.3 percentage points to 4.5%. Convenience retailer Co-op’s share is also down 0.3 percentage points to 5.7%.