The rising cost of living is leaving many Brits feeling strained, with nearly half reporting feelings of stress or exhaustion (the7stars Pulse), which is tied to nearly half feeling uncomfortable with their current financial situation. Additionally, for the first time since we started tracking in our quarterly tracker, the QT, the number of Brits feeling less comfortable about their income than they did a year ago has surpassed those feeling stable. The substantial shock of the cost-ofliving crisis has produced a tangible financial impact on millions of households. As a result, consumer confidence has fallen, dropping to -41 in July 2022 (GfK Group), the lowest level in 40 years.
UK-wide figures show that financial struggle is high but there are consumers who are faring better. Research from Savanta found there are four key groups when it comes to economic resilience and disposable income: Unaffected, More Cautious, Actively Buying Cheaper, and Cut All Spend. The largest segment is ‘More Cautious’ at 20 million adults in June 2022, which has remained stable since tracking began in 2019. This is followed by ‘Actively Buying Cheaper’ at 13 million, ‘Unaffected’ at 9.5 million, and finally ‘Cut All Spending’ at 5 million. The result of this is that a fifth of the population’s disposable spending hasn’t been affected by the cost-of-living crisis and over two-thirds are spending but making shrewd adjustments. Adjustment to spending is varying by category depending upon the impact of inflation and consumer intention to spend.
As we look ahead to Christmas, there is an underlying level of strain on consumers. However, the continual resilient attitude and desire for occasions that are out of the ordinary, providing distraction and joy, are high. A gratifying 85% of Brits (the7stars Pulse) agree that although there is considerable negativity, they are trying to make the best of the situation. This supports the7stars white paper earlier in the year ‘A People First Response in A Crisis’ which highlighted the resilience of Brits to adapt to new realities, with 64% agreeing that ‘in difficult circumstances, I keep calm and carry on’.
Moments beyond the day-to-day routine provide a chance to escape and celebrate. Half agree that Christmas is what they are looking forward to most in Q4. These moments offer an opportunity to spend time with friends and family. Getting together as a big group at home is the key setting for these occasions (39%) along with a quarter going out to pubs/bars/restaurants and over a fifth attending organised events (the7stars Pulse).
So, whilst Christmas this year is under more strain than in previous years when it comes to spending, Brits are going to celebrate, still prioritising what matters most: spending time with their friends and family. Brands that succeed in consumers’ minds will be the ones that acknowledge the financial pressure and focus on helping to bring people together.