How the recession has changed the way people research and buy products
In the third of our series looking at the future of Britain, OMD’s insights director Chris Worrell explores how the recession has changed the way people research and buy products. Get ready to sell to a much savvier consumer.
It doesn’t seem that long ago that we were talking about the prospect of Britain entering an unprecedented triple dip recession. How quickly things change, as evidenced by the front page of the Evening Standard a few weeks ago, which was emblazoned with the headline ‘Boom Time Britain’. House prices up, manufacturing output up, growth figures up, interest rates still held low.
However, now is not the time to get carried away. Obsessing over economic data betrays how people across the country are really feeling, and behaving. OMD UK’s Future of Britain project has sought to chart some of the fundamental shifts we are seeing in Britain, and one of the key areas is the legacy effect of the downturn, something we have called Crunched Consumers.
This new ‘normal’ consumer mindset is one of mindful rather than mindless consumption. 62% of Britons say they have now ‘started’ to buy own-label products, 78% shop around more for the best prices and 53% say they only buy necessities.
What’s more, we feel that a long-term reset button has been pressed; over half of the people we spoke to that said they shop around more for the best prices said they would continue to do so, even when their finances improve.
The long length of the downturn, allied with the very shallow and drawn-out shape of recovery, has allowed these behaviours to become firmly ingrained in the consumer psyche. In fact, if you talk to consumers about their new savvy shopping behaviours they don’t really see it as a coping strategy or behaviour change, they just see it as something they do now.
Consumers too are embarking on a great unwind, unburdening themselves of both debt and ‘unnecessary’ spending. One of the interesting exercises we conducted in our Future of Britain research was to offer half of our respondents a hypothetical bonus of £500, and the other half £5,000, and then ask them how they would spend it. In both instances over a third of the money was put into savings (followed by spending on a holiday and paying off credit card debt). The consumer priority right now is to save not spend.
That said, actual ONS data does point to a slight relaxing of this consumer strictness. The savings ratio has fallen since a real spike in 2009. However, it is nowhere near the lows seen at the height of real Boom Time Britain, and the situation is complicated somewhat by the fall in real wages squeezing consumers’ ability to save.
The key lesson for brands is that, whatever the economic data tells us, the focus should be on tracking real consumer sentiment and behaviour. Taking an insight-first approach will allow successful brands to identify new opportunities, to interpret and empathise with the consumer mindset and navigate what is an increasingly complex landscape.