Consumer cost-cutting hits two-year high – but not on tech
The number of Brits cutting down their spending has hit its highest level for two years.
However, when it comes where consumers are looking to cut back, electrical retailers needn’t be too worried, as only 14 per cent of people said they were cutting back on upgrading their technology products.
The latest Global Survey of Consumer Confidence and Spending Intentions from Nielsen revealed that 53 per cent of Britons admitted to taking cost-cutting measures in the second quarter of this year, which is the highest level since 56 per cent did so in Q2 2015.
However, a year ago, household cost-cutting activity was at its lowest level on record at 40 per cent, just two months after the Brexit referendum.
Following the vote, the UK was the second most confident country in Europe, behind Denmark, whereas now it has slipped to ninth. It fell seven points from 106 in the final quarter of 2016 to 99 in Q2 2017. However, it still remained higher than the European average of 85.
The survey also revealed that almost half (45 per cent) of British people thought the country was in a recession, and 55 per cent of those thought it would last for at least another year.
“A variety of factors has contributed to people tightening their purse strings,” said Steve Smith, managing director of Nielsen UK and Ireland. “The pound’s weakness against both the dollar and the euro is finally feeding through to shop prices, which means real inflation is running at over 2.5 per cent. In turn, this remains ahead of general wage growth and consequently, real household disposable income is being squeezed.”
Rupal Karia, head of commercial, UK and Ireland, at Fujitsu, commented: “With sluggish wage growth and rising inflation squeezing household finances, consumers are more conscious of where and how they spend their money. To protect their success in the future, retailers must continue to find ways to keep ahead of trends, so that they can meet consumer’s demands.
“As the UK continues its digital journey, technology has a crucial part to play in helping retailers find ways to differentiate their experiences from their competitors. And in times of ever-increasing customer expectation and desire for instant gratification, if retailers want to really stand out, it’ll be more important than ever to make the in-store experience as seamless as shopping online – this is where smart use of in-store technology can come into its own.”
He added: “Our own recent Forgotten Shop Floor study found that eight-in-10 consumers reported that they would spend more with retailers that have a better technology offering, which means that while high-street stores hold greater opportunities than ever, those unwilling to embrace technological advancements will not reap the rewards.
“Retailers must be visionary in their use of tech and give shoppers what they want, before they know they want it. With consumer confidence plunging, competition is fierce and both customer loyalty and shopping experience are weighing in. And with customers and competitors poised to move forward, those standing still face a worrying prospect – being the next generation of retailers to be pushed out of the high street for good.”
- Main image: Audio Technica AT-SR5 BT headphones