A year ago when I reported on the results of our 2014 Recession Tracker (The Recession may be over, but thriftiness is here to stay), I was unsurprised to note that economic concerns had fallen since 2009 – a time when we were in the depths of recession. Well, the results are in for this year and, whilst concern for issues such as the price of gas/electricity, the rising cost of living and the price of food remain high, yet again, we see a significant falloff since this time last year.
This continued fall in concern is not surprising given the recent report by The IFS showing that average household incomes are now back to pre-crisis levels (http://www.ifs.org.uk/publications/7616). But is it all due to the improvement in incomes or because we have all become accustomed to living in a challenging economic climate?
This idea that we have grown used to living in a struggling economy is also suggested by fact that, in same way as we have seen a fall in the proportion of people expressing concerns, there has also been a significant drop off in the number claiming to have altered their behaviour as a result. For example, in 2009, C. 60% claimed to have changed their grocery shopping behaviour in terms of the shops they used, changing what they buy and spending less. In 2014, this figure had fallen to around a half, and has subsequently declined further so that only a third now claim to have changed their grocery shopping behaviour.
And yet, whilst consumers claim not to be changing their behaviour, we know that this is not the case – we only have to look at the rise of Discounters, the abundance of promotions, and the popularity of Tesco’s Price Promise and Sainsbury’s Brand Match to see that people are continuing to shop around and are buying based on price. However, this change in behaviour has become so ingrained in us that being savvy is now seen as the norm.
As I commented last year, it seems that thriftiness is, indeed, here to stay. This has implications for manufacturers and retailers alike. A number of clients have asked us recently how we can move shoppers away from being so price led, but the simple answer appears to be that we cannot.
This, therefore, makes it even more essential to understand the role of price and promotions for a category, where they sit in decision hierarchy and other factors which have the potential to be leveraged. For categories where price and promotions top the tree (which in some cases can result in packs being sold at a loss), it is essential to understand if, and how, changes can be made to the price structure for the whole category and what the implications will be for brands as well as the category as a whole.
Here at Marketing Sciences, we help many clients answer questions such as these. For information on how we can help understand the role of price and promotions in your category, please do get in touch.Subscribe