- Enduring ‘Era of Considered Consumption’ continues to drive changes in purchase behaviour
- Consumers looking to switch to cheaper brands and source products to help them navigate uncertainty
- More than three quarters say they are taking significant steps to manage their finances more effectively
- A quarter of Brits say they are planning to open a savings account in the next 12 months
More than a third of UK consumers (38%) say they are drawing down on savings to manage the cost of living, according to new research from the UK’s leading independent media agency, Medialab
Now in its second wave, Medialab’s Considered Consumption research reveals that the cost of living linked to inflationary increases is impacting purchase decisions and creating a step change from consumption to more discretionary purchases, as consumers look to switch to cheaper brands, driven by necessity or choice.
More than three quarters (88%) say they are taking significant steps to manage their finances more effectively including actively taking steps to reduce outgoings (48%) and shopping for better value goods and services (59%). Furthermore, consumer sentiment on economic prospects remains muted, with over half of respondents (57%) who have already taken significant steps to reduce outgoings saying that they didn’t expect things to return to normal when looking ahead to 2024 and less than a quarter (21%) of respondents saying they are happy with the state of Britain (Source: Ipsos survey).
Despite feeling the pinch, this sentiment is driving a desire for escapism from consumers and a commitment to continuing to invest in experiences. The most popular activities include eating out (59%), getting a takeaway at home (47%) and having a day out (45%). In contrast, the lowest prioritised purchases include maintaining a gym membership (11%), paying for a subscription (15%) and going to the pub (28%).
Positively, consumers are eager to feel empowered and take control of their financial management, with over a quarter (28%) saying they were planning to open a savings account in the next 12 months. This follows recent Kantar research¹ revealing that almost 9 million adults said they are considering getting a money management app in the next 12 months.
And there is a clear correlation with marketing and media spend effectiveness for FinTech brands when paired with consumer search demand generated by fluctuations and economic shifts. The impact of Covid in 2020 which was proceeded by interest rate increases in May 2022 and again in 2023 all generated spikes in product searches and switching activity among consumers, creating important marketing ‘moments’ for financial brands to drive brand awareness, establish strong connections and build loyalty.
Whilst paid search and online video advertising (OLV) is delivering the biggest short-term impact in relation to percentage of ad generated sales for FS brands, TV remains by far the most influential in reaching audiences.
Nick Parker, Integration Director at Medialab, said: “Chronically low growth, high inequality, and low investment, coupled with acutely high inflation and interest rates has led to an extended downturn. And people know this. Most people think we’re in the middle of the cost-of-living peak. Many expect there’s more to come, and audience behaviour has shifted to cope. People are seeking out better value, managing their finances to look after their loved ones and, as Barbenheimer shows, finding moments of escape.”
“This era of considered consumption will last, but it’s not all doom and gloom. Audiences more actively managing their money creates opportunities for financial services providers as people shift insurers, mortgage providers, and bank accounts. Driving short-term response is clearly key. However, as previous downturns have shown, it’s also crucial, where possible, to grow brand meaning, to harness shared moments to connect with people and, as brands from Nationwide, to McDonalds, to British Airways have shown, to demonstrate empathy with people’s mindset.”
