The global pandemic has shifted many consumer circumstances, mindsets and priorities over the last two years. Even as we settle into the ‘new normal’ and resume some pre-pandemic lifestyles, it’s apparent the retail landscape has changed. Now there is a pressing need for brands and retailers to understand the new economic divide that is fragmenting shopping behaviours.
That much is shown in our Economic Divide survey, which indicates the extent to which consumers’ experiences during the pandemic have impacted their future outlook. In fact, 30% of global respondents to our survey said they had a totally different set of priorities from 2019.
Based on this study, we have identified five new consumer groups.
The five consumer groups
Following the pandemic, 15% of UK consumers are identified as ‘strugglers’. These are consumers who were already financially challenged or experienced job or income loss, and continue to do so today. Meanwhile, 11% are ‘rebounders’, who experienced job or income loss during Covid but are back on track now.
The single biggest consumer group are the ‘cautious’ (39%). This demographic did not see an impact on their household’s financial security during Covid but are still cautious with spending habits. Two groups experienced no impact at all – the ‘unchanged’ (27%), who spent normally, and the ‘thrivers’ (8%). The latter is the smallest group of all, those who saved money during Covid and are now more financially secure.
It means that, in total, 65% of UK consumers are strugglers, rebounders or cautious, and they’re altering their buying and consumption patterns accordingly. These new consumer realities are incredibly important for retailers and manufacturers to have a handle on today, so that they can grow tomorrow.
Adjusting strategies
The big question here that we as an industry should be asking ourselves is: how are we adjusting our strategies to cater to these new consumer needs?
For example, in our recent survey, over half (53%) of all Brits noticed the increasing cost of their weekly grocery basket. Among strugglers, that figure rose to 70%. Although thrivers are the most financially secure, 62% noticed a climb in grocery spend despite purchasing the same items.
With rising prices on the majority of Brits’ minds, consumers are re-evaluating the products in their shopping carts. Twenty-nine per cent of strugglers, for example, tend to select the lowest-priced product from their preferred repertoire, while 27% will select the lowest-priced product irrespective of brand. Twenty-four per cent of strugglers will monitor the overall cost of their baskets, and 21% will avoid buying certain products if basket costs grow too high.
Thrivers, on the other hand, take an altogether different strategy. Thirty-two per cent of this group would buy a smaller size of their favourite branded product to manage costs, and 21% manage spend by selecting whatever brand is on promotion.
This last data point is incredibly interesting: the thrivers are the most likely group to manage costs by buying whatever is on promotion (21%), followed by the cautious (19%) and the strugglers (18%). As we have seen promotions increase from 19% to 21.5% in the past four weeks, the rate of switching to promoted brands will be something to watch.
The changes in today’s consumer landscape bring challenges to the fmcg industry, but also opportunities for those players who get these new shifts right. By understanding the landscape now – and reinventing portfolios and strategies – UK retailers and manufacturers can find new, exciting pockets of opportunity despite this cost-conscious environment.
No comments yet