Yet more consumer behaviour research out this week shows that belt tightening has reached a new notch – and the squeeze is likely to continue for some time to come.
The latest raft of data from multiple sources points to consumers not only spending less, but also radically changing the focus of what they are buying – with some behaviours bordering on the criminal.
The biggest shift seen is in the dropping away of support for sustainability. A study from GWI suggests that the first ‘nice to have’ to bite the dust will be looking for sustainable options. Interest in news, politics and social issues has dropped by 90% it found, suggesting that shoppers are now much more focussed on looking for bargains than they are more expensive items that have a positive environmental and/or social impact.
This is backed up by data from OC&C’s latest Annual Retail and Proposition Index report which finds that the retailers that are doing well currently are all those that are predominantly value-led…. Not values, but real value for money.
It finds that shoppers are increasingly trusting brands based on their perceived value for money, rather than anything else – including their environmental credentials.
This is also playing out across shoppers Peak shopping habits. This year’s peak also coincides with a unique Winter football World Cup – taking place now, rather than in Summer, as it is in Qatar – and, conventional wisdom would have you think that this is a boon for retail. A recession forcing shoppers to look for bargains and a big sporting event that brings people out to be entertained and by football paraphernalia.
Sadly, reality points to neither of these things happening. Black Friday spend is set to be down by at least 4% and World Cup spend is set to be 18% lower than that in 2018.
This is potentially bad news for retailers. Nearly two thirds surveyed believe that this year’s peak season is a make or break for their businesses and, if they don’t see a surge in sales, then many may go under.
Naturally, to counteract this, some are inflating their prices now so that, when they do ‘discount’ on Black Friday they aren’t losing as much margin. Equally, however, hard-pressed consumers are resorting to ecommerce fraud to get items for free.
Together, all these factors are eating into retailer profits and confidence. Even M&S – which has actually had a very good half year so far – has seen profits fall 24% YoY, despite upping sales considerably.
We can only hope that we are currently in panic mode. The economic news is grim and the country, rocked by the rapid and dramatic failure of ‘Trussenomics’, is feeling uneasy. As Christmas draws near, spending will go up – it always does – and it will probably not turn out as bad as predicted. However, come the new year, with festive high spirits burnt out, that is when the real downturn will occur.
The interesting thing is the technology may yet make things better. Of the 950,000 consumers that GWI surveyed, 47% are interested in creating an avatar and many are looking for new ways to access the internet – the metaverse being one of them – so there may yet be some light at the end of the (virtual) tunnel.