UK consumers rein in spending as inflation bites - GWI report
As the cost-of-living crisis deepens, it’s no wonder almost a third of UK consumers are now feeling insecure about their finances.
That’s according to a new survey from audience insights company GWI that shows mounting negatives: 62% have felt a moderate/dramatic impact of inflation and 90% feel the cost of living is more expensive compared to six months ago.
What’s more, concerns over a possible recession ahead and rising inflation are bad news for retailers, creating a ‘consumer dilemma’, with Britons having to decide what to cut back on, it said.
When asked what UK consumers are likely to spend less on, treats/luxuries, nights out or eating out and clothing topped the list.
Notably, rising costs are being noticed by both higher and lower earners alike with 34% of higher earners and 47% of people in lower wage brackets saying they’re cutting back on spending. Some 44% of people in the UK also reported spending less compared to 2020.
At least the report showed 50% of people so far continue to feel “somewhat financially secure”.
Meanwhile, as the number of people making lifestyle changes to save money grows, sustainability may also suffer due to that consumer dilemma.
Even though 52% of consumers say they plan to be more careful with their energy usage and 44% plan to walk or cycle more, "this is likely to be short-lived".
In fact, despite the emphasis placed on sustainability and ethical business in recent years, the most important factor when contemplating a sustainable purchase may actually be cost, the report noted.
When asked about the barriers to living a more environmentally-friendly lifestyle, the cost of eco-friendly alternatives came out (48%) as the main barrier to going green.
Similarly, just 20% of UK consumers said they buy sustainable clothing or plan to change to green energy providers, which could be down to the idea that they’re likely to cost more.
However, at least the report showed 50% of people so far continue to feel “somewhat financially secure”.
Jason Mander, Chief Research Officer at GWI, said: “Even though many may feel that they are not yet at a crunch point regarding finances, the consumer dilemma is starting to make itself known and there are choices being made throughout the purchase cycle, even for those who are feeling relatively comfortable.
“Early casualties are luxury items and ‘treats’ such as nights out and takeaways but we’re already seeing concerns over the cost of what are for some, unavoidable purchases like fuel. It’s becoming increasingly crucial for companies to understand the daily choices that consumers are having to make.”
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