According to recent polling, the ongoing cost-of-living crisis continues to have a significant impact on the spending habits of British consumers, with 96% reporting its effects. This figure has remained consistent since October 2022. Unfortunately, it seems unlikely that the situation will improve in the second half of the year, as consumer insights predict a net decrease in spending on non-essential items.
Moreover, this financial pressure is exacerbated by the increase in mortgage repayments and rental costs. In an effort to reduce their expenditure, 38% of individuals surveyed expressed a willingness to change their purchasing habits by opting for more non-branded products. The most common product categories experiencing a shift towards non-branded alternatives are food and beverage (49%) and household products (33%).
When it comes to branded products, quality emerges as the primary driver for consumers, with 44% stating that they choose branded items because they taste or work better. Another 26% value branded products for their longer lifespan. Interestingly, sustainable production influences the purchasing decisions of 19% of Brits, although its impact seems to be less significant in the current economic climate.
To illustrate, when asked how brands should respond to the cost of materials crisis, where they can no longer offer products at the same price, 37% of Britons ranked making concessions in sustainability efforts as the top solution. This was followed by reducing the size of products (31%), increasing prices (23%), and reducing quality (9%).
At OurMind, we firmly believe that brands must understand what factors will retain customers and encourage those opting for non-branded products to switch to their offerings. When individuals were asked why they were willing to switch from non-branded to branded products, the top responses included offers such as multi-buys and discounts, comparable prices to non-branded alternatives, and a perceived improvement in the quality of branded products.
Mark Ursell, the CEO of QuMind, acknowledges the challenges that fast-moving consumer goods (FMCG) companies will face in the second half of the year, as more customers actively seek cost-effective, non-branded alternatives. Ursell asserts that these brands must gain a clear understanding of the qualities that attract their customers and prioritize their advertising and marketing efforts to ensure they remain top-of-mind for consumers.
In conclusion, the cost-of-living crisis continues to impact British consumers’ spending habits, with a significant number of individuals opting for more cost-effective non-branded products. However, quality remains a primary consideration for branded product choices, and sustainable production still holds some influence. Brands must adapt to these changing preferences and focus on effectively communicating their value proposition to retain customers in this challenging economic climate.
