…but also, quite possibly, to a cheaper supermarket
The latest wave of VisitEngland’s Staycation Monitor provides some fascinating pointers to current and future consumer spending priorities. Among other things, this survey provides trend data on a range of measures that consumers have taken to cut back spending in response to the economic downturn. In summary, it shows a reduction in cost cutting behaviours in areas of discretionary spend such as treats, leisure and holidays, but a further tightening of purse strings when it comes to essential items like food and energy.
Between September 2014 and February 2015, the proportion of people ‘cutting out little luxuries’ fell from 46% to 37%. Those ‘spending less on holidays’ also fell slightly (from 34% to 32%).
In contrast, the proportion of people cutting back by ‘being more careful in the supermarket’, ‘using a cheaper supermarket’ or ‘changing energy supplier’ all increased marginally. These increases in frugality were small, but happened despite a period of sustained economic growth between the two waves.
Perhaps more interestingly, the survey also asks about future intentions in relation to the behaviours. Here we find an even bigger divergence between discretionary and essential items. The proportion of those who have been using a cheaper supermarket, and do not expect to stop in future actually increased from 73% to 85%. Put differently, that means that almost a third of UK consumers (32%) say that they have started to use a cheaper supermarket and do not intend to stop in future. In contrast, just over half of those who have been spending less on holidays, do not expect to stop in future. At 17% this group is half the size of those seeing no end to their cheaper supermarket shopping.
Qualitative research we have conducted recently provides a hypothesis to support and explain this disparity. When we ask consumers to reflect on how they have felt about cutting back, they are likely to say that they have really missed treats and leisure experiences and they would like to return to previous spending patterns when they can. Their absence has had a negative impact on their quality of life.
However, those who have switched to a cheaper supermarket or energy supplier are much less likely to report a negative impact on their quality of life. Rather, they comment on the considerable amount of money saved for little or no discernible reduction in product or service quality.
All of which points to continued tough trading conditions in the grocery sector, despite the prospect of a sustained economic recovery.