Mon, 2nd March 2009

87 percent of shoppers are making changes in reaction to the recession

Price war winners, the gender divide, brand Vs own label, Necessity Vs Indulgence statistics revealed....

According to research launched today by Shoppercentric, an independent agency specialising in shopper behaviour research, 87 per cent of UK households are making changes in reaction to the recession. With more than a thousand online interviews conducted with the main grocery shopper for each household, the purpose of the research is to provide a clear picture of exactly how shopper behaviour is changing - right now and in the future.

Among the findings 72 percent are cited as making small changes to spending, but as the economic situation develops it is likely that more shoppers will have to make larger changes to their shopping habits.

The research identified four key attitude groups among shoppers:

1.Unaffecteds - 13 percent of shoppers who seem confident that their situation or their existing spending patterns mean they won't be affected by the recession. Although this group claims to be unaffected by the recession they are still making changes to their shopping habits, albeit at a lower level than the average.

2.Planners - 15 percent of shoppers who haven't been affected yet, but are making changes just in case. The majority have noticed their household costs going up, and are planning for the worst in terms of the recession. They have a focus on price, but also on avoiding temptation, and economising by making meals from scratch.

3.Soft Reactors - 48 percent of shoppers. These shoppers claim they have had to make changes to household spending because of the recession, but that so far these changes are small. The tactics they particularly favour include switching to Own Label brands, sticking to large main grocery shopping trips rather than top-up shops, being more price aware and avoiding both waste and temptation. In some respects, therefore, shoppers in this group are learning the basics of household financial management.

4.Strong Reactors - 24 percent of shoppers. This is the group most seriously affected by the economic situation, and as a result are having to make major changes to their spending habits. They are also most likely to demonstrate active shopping between stores in order to get the best deals or prices available. If this group does grow in size over the coming months then competition between the everyday low pricing and discount stores will be fierce as those retailers look to attract and retain this group.

"This research provides us with useful insights into shopper behaviour in recession hit UK today," comments Dr Susan Rose, Consumer Behaviour Expert at Henley Business School. "It demonstrates that whilst UK consumers are being differentially affected by the downturn in the economy, they are all making changes to their buying habits to a greater or lesser degree. These changes include shifts in attitudes and a reconsideration of what they value, which in turn results in actual adjustments in purchase behaviour." *#*8195;

Other key findings:

• The gender divide: 16 percent of men can be described as Unaffected compared with 11 percent of women. Furthermore women appear to be reacting faster to tightening their budgets with 50 percent of women falling into the soft reactor group compared to 46 percent of men.

• Shopping strategies: 87 percent of respondents said that they were cutting back on temptation and more planning of what they need before a shopping trip, 92 percent said they were being more price sensitive and looking for price cutting promotions, 86 percent were making an effort to avoid waste and to making things go further. A further 84 percent were avoiding the more expensive shops and going where the deals are. • Passive Vs Active choices: As the figures demonstrate, shoppers are not pinning all their hopes on a single strategy, but are using a range of tactics to cope with "the worst economic downturn since the war". Passive choices - making choices based on what's in the store the shopper is in, is the approach most likely to be taken by those in least need of reducing their spending. Active choices - choosing which store to use based on which will offer the best value is typically adopted by those in most need of reducing their spending - 91 percent of Strong Reactors Vs 68 percent of Unaffecteds.

• Changing shops: 40 percent have now started to use shops that they didn't frequent before.

• Local shop usage: 27 percent cited that they were using local shops more often. This could be the result of wishing to save on travel costs, but it could also be related to a growing feeling of the importance of 'buying British' and the desire to support local businesses.

• Ready meals Vs cooking from scratch: A huge 63 percent are buying ingredients to make meals from scratch rather than buying ready meals.

• Less shopping trips: 45 percent also said that they were trying to do more big grocery shopping rather than several smaller ones.

• Store environments Vs pricing: 63 percent said they would prefer stores invested money in lowering prices rather than creating smarter environments.

• Winning the price war: Lidl and Aldi have seen the biggest growth in customers who are turning to the discounters in the recession with 22 and 21 percent (respectively) extra shoppers.

• Indulgence Vs necessities: Of all the different spending categories, 71 percent said that going out to pubs and clubs was the biggest area of indulgence they were cutting down on. This was closely followed with 66 percent reducing the number of times they eat out and 61 percent said a holiday was an indulgence they would do without. In terms of necessities consumers cannot go without, the most popular with 28 percent was the purchase of fresh meat and fish followed by the purchase of toiletries at 16 percent.

• Brands Vs Own Label: 57 percent of the sample agree that they are buying more own label products now than in the past as a result of the economic situation.

Danielle Pinnington, Managing Director at Shoppercentric concludes: "With the economic situation developing on a daily basis, it is very clear that shoppers have been significantly impacted. We believe that there will be a long term impact as well which may result in a less frivolous, more considered population. The current situation is forcing shoppers to confront their past excesses, and many of the cost-cutting strategies they are learning as a result are likely to remain with them once the downturn ends. A simpler, less excessive lifestyle, however, will mean that retailers and brands will have to be more competitive to stay in the game. Simply creating a brand, giving it strong promotion and hoping for the best, will no longer be enough. What retailers need to understand is that shoppers are looking for support through the bad times, and if they can provide that, it will be rewarded during and after the recession with repeat business and customer loyalty."