Communicating During the Cost-of-Living Crisis
We’re living in challenging times. The UK is experiencing the most significant squeeze on living standards in a generation, and the cost-of-living crisis is now the primary concern of UK consumers.
From the rise in food and clothing costs to the increase in holiday and fuel prices, the media is saturated with discussions about the impact of rising costs. In this uncertain landscape, understanding what your customers are thinking and what matters to them has never been more important.
In the days following the chancellor’s spring statement, WPR conducted research with more than 2,000 UK consumers to explore their views on the economic climate and how they believe it will influence their household spending in the coming months.
In WPR’s latest Reading Room blog, managing director Jane Ainsworth outlines five key themes to emerge from the research.
1. Consumers are worried about the cost of living
An overwhelming majority – 87% – of the people interviewed by WPR said they were concerned about the cost of living. On average, the research showed that households expect to be £232 worse off each month, and 60% also predict a recession in the next year.
With this in mind, just under half of respondents said they anticipate cutting back ‘a little’ on household spending to cope with rising costs, while 37% expect to be making ‘greater’ adjustments to their outgoings.
2. A shift in spending habits is likely
Having acknowledged that consumers expect a reduction in disposable income, we wanted to explore how people believe they will adapt their behaviour to accommodate this.
When we looked at spending on meals and days out, only 20% envisaged no change at all. Almost 35% predicted they’ll stay home more, so that they can visit the places they enjoy most when they do go out, while 11% thought they would opt for cheaper places so they don’t have to reduce the frequency of their meals or days out.
The trend followed a similar pattern when we asked about fashion, beauty and other consumables. Nearly a third (30%) will shop less than they used to in order to still buy their favourite products, while 20% will make bigger cuts across the board and roughly the same percentage expect their spending to be unchanged.
With customers expecting to spend more time at home, groceries, health and wellbeing, garden improvements, home entertainment and UK holidays all fared comparatively well. In contrast, trips abroad, new cars, clothes, food to go and meals out look likely to take a bigger hit.
3. Customers care about a brand’s social and environmental ethos
Across income bands, ages and regions, sustainability was ‘somewhat’ or ‘very’ important to over half the respondents. It was interesting to note that the highest scores for sustainability came from those aged 25-34, followed by the over-55s, proving that concerns about the environment are not solely the preserve of the young.
An even higher percentage – 56% – of consumers said it was important for the brands they buy from to be socially responsible, with only 13% considering it unimportant.
This all points to the need for brands to continue to invest time and resources in communicating their credentials and developing strategies to engage with their customers in a meaningful way on these topics.
4. A positive digital footprint is increasingly influential
With people being careful about how they spend their money, they’re unsurprisingly keen to research options before they part with hard-earned cash. Review websites such as Trustpilot and Tripadvisor were cited as important by 60% of people, while only 13% said they had little bearing on spending.
As might be expected, younger respondents put greater emphasis on social media and influencers, but we also saw increased interest in a brand’s social media presence from people within higher income brackets, suggesting a potential sweet spot for brands targeting both younger and more affluent buyers.
5. There’s potential for the brands that get it right
Despite the challenging conditions, there are opportunities for both client retention and acquisition; building deeper customer loyalty and engagement will pay dividends in a market where customers want to feel appreciated and valued. And there is potential for brands to capitalise on the desire of a significant proportion of consumers to not limit but prioritise their spending on their favoured products and activities.
Customers of all ages will be seeking out brands that focus on sustainability while also providing ‘entertainment’ through their communications. They will take note of the brands that are talked about by the people who matter to them and, crucially, they will do their own research too.
In short, the brands that get their marketing strategy, messaging and mix of activity right will be the ones that can connect most powerfully with audiences thinking carefully about where and how they spend their money.
Want to learn more?
WPR’s full report ranks 20 core consumer spending areas from least to most affected, looking at likely net changes by age, gender, household income and location across a wide range of sectors including hospitality, leisure, travel and tourism, fashion and beauty, retail, home and garden, and automotive.
It also explores in greater depth where consumers expect to change their spending habits, and the extent to which factors ranging from discounts and deals to recommendations and ease of payment are influencing their behaviour.
To request a full copy of the ‘Communicating During the Cost-of-Living Crisis’ report, please complete the form below:
The author: Jane Ainsworth is managing director of WPR. She has more than 20 years’ experience in developing and delivering communications strategies for consumer brands including Dunelm, Tesco, Mothercare, Greene King, John Lewis, Bullring, Beaverbrooks and Westfield.