Food, booze and cigarette brands are likely to escape relatively unscathed as British consumers put themselves first and become much more selfish in the face of massive Government spending cuts, according to a new study.
The research, carried out for marketing agency Rapp, shows the cutbacks are accelerating radical changes in consumer behaviour that will require brands to refine and adapt their marketing strategies.
The research identifies new behaviours and coping strategies being increasingly adopted in the face of the spending review and also shows that – contrary to many reports – the cuts will have a greater impact on the poor and the well-off more than middle Britain.
Undertaken for Rapp by trends and forecasting experts The Trajectory Partnership, the research was carried out among a representative sample of 2,048 consumers across Britain.
The top line findings show that 62 per cent of UK consumers feel that the spending cuts will damage consumer confidence (10 per cent disagree) and 72 per cent believe they will result in a reduction in overall consumer spending (6 per cent disagree). Some 61 per cent believe the cuts will mean a reduction in their own spending (13 per cent disagree).
In terms of overall impact on expenditure, the poorest plan to cut back by, on average, 4.6 per cent and the richest by 6.5 per cent. Those in the middle income brackets will cut back by between 3.2 per cent and 3.6 per cent.
Spending on education and health will suffer most, being reduced by 9.4 per cent and 6.5 per cent respectively. Cutbacks in other sectors include: Holidays (6.2 per cent), Vehicles (6 per cent), Restaurants & hotels (5.8 per cent), Recreation & Culture (5.6 per cent), Charitable donations (5.2 per cent), Transport (4.6 per cent), Household goods & services (3.5 per cent), Communication (2.9 per cent), Clothing & footwear (2.5 per cent) and Housing, fuel & power (2.2 per cent).
The areas where consumers will cut back least are food (1.5 per cent) and alcohol and tobacco (2 per cent). In terms of family type, families with children will cut the most (5.3 per cent).
The spending cuts are also accelerating three key overall trends in consumer behaviour, according to Gavin Hilton, director of customer experience at Rapp. He said: “Forget David Cameron’s ‘Big Society’ – the research is clearly showing it’s all about ‘The Big Self’. We’re in an era of retrenchment where consumers will focus increasingly on doing the right thing – for themselves. Our research clearly shows that people are becoming more selfish, establishing ‘Fortress Me’.
“Secondly, it’s about ‘irrational Economics’,” said Hilton. “After two decades of freewheeling spending consumers are starting to redefine what is a necessity and a luxury. It’s about protecting their sense of self and identity so it may be about cutting back in one area but preserving spending on something that may once have been perceived to be a luxury. Consumers want to be left to decide for themselves what constitutes a necessity.”
Thirdly, we are now in an era of ‘Newtility’. Now, it’s not just about value for money, added Hilton. “It’s about the value of my time, putting a value on my attention, the value of my assets. This is already spawning services that pay for you to read email marketing message, services that allow you to rent out your car when you’re not using it. And, of course, services like eBay that let you sell what you don’t want any more.”
He said: “Such an overall scenario represents enormous challenges for brands and their marketing – but also, clearly, opens up opportunities for those who can react and adapt to shifting consumer behaviour. We will be developing a prorprietary methodology that will help brands understand which coping strategies their customers are adopting and consequently how they should react.
“Increasingly it’s not going to be about the brands that shout the loudest but brands that deliver the highest practical and emotional utility to their customers. To do that they will have to get closer to their customers than ever before, rely on really sweating the data and creating actionable insight that will help win traction, influence and advocacy.”
More detail on the research is available at: www.uk.rapp.com
