As we move toward the end of August, it’s inevitable the next thing on your mind is Q4 and the opportunities and challenges it brings. Whilst we still have some time ahead of us, we want to give you insights into how your consumers are thinking and where the economy is going this season.
Inflation now stands at 5.25%, this is the highest level we’ve seen since the financial crash of 2008. Simply put, inflation is a broad measure of the increase in prices over a period of time. The areas inflation most commonly looks at are overall increases in prices or the general cost of living in the country, (this is prices, bills, utilities etc. combined). What this means for consumer businesses is the purchasing power of their customers is reduced. Prices go up but wages rarely keep up with this. Consumers are then forced into a position in which last week’s shopping list, is no longer covered by this weeks wage. So, your loyal customers could slowly (or sharply if you’re unlucky) decline.
The unemployment rate stands at 4.2%, with one hundred thousand people being made redundant between April and June. However, this maintains the year’s trend of the UK’s lowest unemployment rate since 1974. Average wages fell -0.6% in real terms in this same period.*
Before we look ahead, it always pays to look back and learn from history. Studies show, 30% of people spent less on Christmas gifts last year. Of those who spent less, 61% attributed this at least in part to the cost of living, 58% to personal finance, 40% to increasing energy costs and 36% to rising inflation.* Many of these themes remain relevant this year, setting a strikingly similar scene to this time last year.
Despite economic difficulties many people are still set on spending. 72% of “Fledglings” intend to spend more on gifts this year.† These are people aged 15-34, not married/living as a couple, do not live with son or daughter, live with parents. What we’re saying is it’s as much about who you target as how you target. 62% of people surveyed like to take time off during the Christmas season to catch up with family and friends. A further 51% enjoy going on days out over the Christmas break.‡ Not only having insights like these, but knowing how to utilise them is fundamental to your success this winter. The general consensus is, whilst we’re going to experience some difficult months, the country will remain out of recession. Further to this, interest rates are predicted to peak by the time spring comes around and it’s all up from there.
In a nutshell, you’ll have to work harder for the business you’d have expected in previous years. Not only this but being strategic with who you’re targeting and how you’re targeting them is critical. It’s not just businesses that will feel the pressure, many of your customers will experience these same difficulties too. This means the way they spend their money will change, likely having a negative effect on your revenue. Repositioning your products and services is key to holding onto your customers. We can help you assess your products/services and reimagine the way you present these to your customers. Considering consumer attitudes during tough times, we will safeguard your sales against penny pinching and construct a strategic foundation you can build upon.