Prepared for the inevitable?
DANIELLE PINNINGTON discusses the reasons why start-of-year retail figures are so encouraging, despite the looming arrival of Brexit
Well January was quite a month this year – with retail sales figures making headlines generally for the right reasons and much to the surprise of some commentators. In fact the figures were so good that it raised questions around whether shoppers were having one last good Christmas before the Brexit button is pressed.
Only time can really tell, because we as shoppers are still getting very mixed messages about the likely impact of Brexit. But we can at least make an educated guess based on historical evidence of shopper behaviour – the best place to start being the most recent recession. During the recession, we tracked the impact on households, and the worst point we measured was January 2013 when the following figures were revealed:
Major changes to spending were being made by 35% of shoppers while 47% were having to make minor changes. A smaller proportion (8%) didn’t need to make changes but were still doing so “just in case”. Just 10% claimed to be unaffected by the national recession.
If we compare this to January 2016, we can see a quite different picture at this point. Instead, 10% of shoppers are having to make major changes to spending, 16% were having to make minor changes, 52% didn’t need to make changes but were doing so “just in case” and 22% claimed to be unaffected.
So maybe Christmas 2016 wasn’t a last spending hurrah, but rather a feeling that, for now, the situation doesn’t require significant belt tightening – despite 34% of today’s shoppers recognising that costs have increased.
I suspect there’s also an element of confidence among shoppers in the fact that the national recession is so recent. Over that long period, they learned how to make the most of the money available, so perhaps they feel better armed to deal with what is now on the horizon. Back in January 2009, we asked shoppers whether they agreed or disagreed with a serious of statements to describe how they were coping with the credit crunch, as it was at that point. This year we’ve covered the same ground, and opinions have changed as follows: Those more careful about avoiding waste than they used to be amount to 11%, 8% plan what they’ll buy more than they used to; 6% buy ingredients to make meals from scratch rather than ready meals; 3% avoid shops known to be more expensive/upmarket; 2% make things go further; 2% use online shopping tocheck how much they spend as they go; -1% believe it’s more important to get the best price even if they have to go out of their way; -2% go wherever the best deals are; -3% tend to buy more own label products now; -5% loo for promotions that save money rather than giving more of the same and -8% are more aware of pricing than they used to be.
The key takeout from this is that shoppers are focusing on prudent behaviour rather than economising – so avoiding waste and planning their spending carefully, rather than looking for price promotions or switching to own label. Of course it is early days, but there are signs that by making the most of the tricks they learned to survive the recession, shoppers might find 2017 easier to cope. Retailers and brands can also apply the lessons learned.