The UK’s decision to leave the EU will cultivate a ‘doubling down’ on current consumer trends in the near-term, according to Canadean.
The research group said: “Right now, financial market volatility means prospects for consumer packaged goods prices and market growth in the UK look, at best, uncertain. Where the value of the pound will level out and how this will affect the worth of the money in British consumers’ pockets is also unclear.
“What we can be clearer on is that within the sliding scale between, at best, consumer uncertainty and, at worst, recessionary forces that Brexit will likely cultivate, in the near-term we should arrive at a place that looks pretty close to the post-recessionary environment UK consumers have already adapted to.”
Canadean added: “The upshot of the above outcome will, in the short-term at least, be a reinforcement of the consumer trends which have dominated over the past few years. Specifically, price consciousness and ‘smart shopping’ have been prevalent, but also these have been countered by occasionally trading up to small indulgencies and luxuries. We can expect consumers to ‘double down’ on these behaviours, in particular ‘smart shopping’ by using vouchers, loyalty schemes and price comparison tools to get the best deal. Clearly technology will play a key role in enabling this.
So where does this leave consumer packaged goods marketers seeking to adjust to the new post-Brexit marketing landscape? Canadean’s view is that those retailers, brands and products which are already effectively targeting these consumer trends are now best placed to deal with the fallout of Brexit. On the flipside, those who have failed to adjust effectively to prevailing consumer trends are likely to fall further behind.
Canadean concluded: “For retail channels, discount retailers and price competition will be continue to be a key feature of UK retail going forward. For brands, those effectively targeting the right consumption occasions – be they value of indulgence or otherwise orientated – should be well set. However, any product simply hoping to benefit from the recent, generally improving economic circumstances may find themselves out of line with consumer trends and economic headwinds as a result.
“Brexit may be a big change, and the impact on companies will be far-reaching as the process progresses, but the keys to targeting consumers in the UK will remain fundamentally similar in the near-future”
Meanwhile, Toby Clark, Director of Research, EMEA at Mintel, also commented on what the vote will mean for consumer spending in the UK. He said: “Mintel’s consumer confidence data shows the impact that uncertainty can have on consumer behaviour. Consumer sentiment showed signs of being held back before both the 2014 Independence Referendum in Scotland and the 2015 General Election. In both cases, sentiment rebounded once the results were clear. The difference then, though, was that the vote resolved much of the uncertainty. This time, the result will only have added to that uncertainty.
“The truth is that it’s too early to be making sweeping predictions about changes in consumer behaviour. For most people, life goes on. They still need to buy groceries, they’ll still be heading to the pub to watch Euro 2016, and they’re still going to be taking their summer holidays. In the short-term at least, everyday spending is unlikely to change dramatically.
“But that uncertainty will still have an effect on behaviour. Just as businesses will tend to hold back on major investments when the future looks uncertain, so too will consumers. Anyone thinking of buying a new house, a car or any other big ticket item will be re-assessing their decision in the light of this vote, and will be considering whether now is the right time to be making a major financial commitment. That’s not to say that they’re not going to make that commitment – but it will be giving them pause for thought.”