- We’re all wearing purple now. Why we’re focusing more on how we feel than how we look in a post-pandemic world.
- It doesn’t matter if you fall down, it’s whether you get back up – just ask Michael Jordan, or a Striver.
- Adapter, Thriver or Survivor – three different shifts in ambitions and values as a result of Covid-19
- How brands can help consumers navigate their changing ambitions and values
- Navigating the Storm: Values and ambitions in a post-pandemic world
- Navigating the Storm: Concerned and Constrained in a cost-of-living crisis
- Navigating the Storm: Prioritising spending with a frugal mindset
I’m worried about what the rising cost of living means for me…
and I’m worried about what the rising cost of living means for society…
and I’m trying to keep my monthly financial commitments down…
and I’m more careful with my spending than ever before…
and I have less disposable income now vs 12 months ago.
If this is you, you’re not alone, in our recent research into our values and ambitions post-pandemic, 1 in 2 people agreed with all of these statements.
Meet the Concerned and Constrained
We’re calling the 1 in 2 who agreed to all the statements above Concerned and Constrained. This group are representative of the total population in terms of income, employment and household composition, demonstrating that while the tangible effects of the cost-of-living crisis are most keenly felt by those on lower incomes, the mental burden is more widespread. The two segments that have undergone the biggest changes to their values and ambitions during the pandemic, Strivers and Adapters, are the most likely to be Concerned and Constrained (63% of Strivers and 66% of Adapters, compared to 49% of all adults), suggesting those who have experienced the most change already are the most mindful of further changes to come (to find out more about all our segments, take a look at our Wave 1 intro to this research).
And our spending behaviour is of course being shaped by the current economic climate, with this especially so for the Concerned and Constrained. In Wave 1 61% agreed ‘I am more careful how I spend my money since the Coronavirus pandemic’; this has risen to 70% in Wave 2, and jumps to 85% of the Concerned and Constrained. This focus on frugality is translating to more considered spending decisions and less brand loyalty, with 8 in 10 adults and 9 in 10 of the Concerned and Constrained spending more time shopping around for deals, 7 in 10 adults and 8 in 10 of the Concerned and Constrained regularly switching to save money, and 6 in 10 adults and 8 in 10 of the Concerned and Constrained delaying big ticket purchases.
Staying sticky and the lipstick effect
So how can brands stand out and stay sticky when consumers are contending with a cost-of-living crisis? Firstly, they can offer practical help – consumers feel that brands, and especially big tech companies, have a role to play in improving the current circumstances. 7 in 10 adults agree that ‘brands have a responsibility to make the world a better place’ and the same proportion agree that ‘big tech companies have a responsibility to help during the cost-of-living crisis’, with both of these figures rising to 8 in 10 of the Concerned and Constrained.
Brands can help their employees directly, for example John Lewis and Waitrose are offering all staff free meals this winter, and a host of big brands including banks, telco operators and insurers are making one-off payments or providing pay rises to support employees during the cost-of-living crisis. And they can help in the form of wider societal support, for example, mobile and broadband operators are working with the Government to identify how they can better support those most in need, Asda are offering all children under 16 a hot or cold meal for £1 in their cafes, and Amazon have committed to offering free entertainment and educational resources as part of the Government’s Help for Households campaign.
Secondly, brands can genuinely stand for something. In the first wave of our research, we found that consumers are increasingly seeking brands that do good for people and planet, and this continues to be the case. Despite the current economic climate, a significant minority (2 in 5) say they are prepared to pay more to buy from a brand with a social conscience. This proportion is consistent between all adults and those who are Concerned and Constrained. When every penny counts, if it can do good at the same time, it counts more.
Finally, brands that help us look after ourselves and loved ones will fare well as we’re prioritising spending on loved ones and little treats to cheer us up. 57% of all adults, and a higher proportion of Concerned and Constrained (65%), are spending more of their disposable income on their loved ones than they are themselves, and 2 in 5 agree ‘I’m more likely to buy little treats to pick me up than I was 12 months ago’ (consistent among all adults and Concerned and Constrained).
This seemingly contradictory behaviour at a time when people are so consciously watching their spending has been documented as the lipstick effect, where sales of smaller luxury items like designer lipsticks peak during tough times as they offer a more affordable emotional uplift that is visible to all. Some claim that the lipstick index is a predictor of an economic recession, and in an interesting extension to this logic, it’s also been argued that a decline in the sale of men’s underwear can predict a recession, as men deprioritise replacing this mostly unseen item when money is tight!
While we didn’t ask about spend on underwear in our survey (maybe one for Wave 3?!), we have taken a look at a range of existing monthly financial commitments and asked if, and how, people intend to change their spending. We’ll delve into this in our next blog, but if you can’t wait to find out more, get in touch!