Consumer habits change with economic ups and downs, something we’ve witnessed acutely during the cost-of-living crisis. A period of sluggish growth in the economy has hampered consumption and influenced spending habits. With an impact on discretionary spending, demand for non-essential goods and services has gone down drastically.
As inflationary pressures continue to affect everything from food prices to utilities, many are facing financial challenges with making ends meet. Consequently, this has led to an increase in borrowing, with lenders issuing loans with same day acceptance to help people access credit quickly and easily.
However, this increased access to low-cost borrowing options hasn’t seen a proportionate rise in spending. As more and more people favour frugality, sustainable and conscious consumer trends have also seen visible, upward growth, especially among young shoppers.
In this article, we’ll be discussing some of the factors that are reshaping consumer habits as a way to tackle the cost-of-living crisis.
1. Impact on Household Budgets
Rising prices have had a huge impact on household budgets as people across the country have witnessed almost a 50% hike in essential items. These include groceries, utilities especially energy bills and fuel costs.
While the government’s autumn budget introduced certain relief measures to tackle the cost-of-living crisis, it hasn’t been particularly helpful in bringing down prices.
As a result, people have been resorting to stringent spending behaviours that prioritise only essential expenses. Most are finding themselves scouting for lower-priced options and switching to cheaper grocery alternatives, no longer willing to prop up brand loyalty.
Recent consumer surveys also suggest that people feel they’re doing better with lower-priced goods and services. A majority feel that though higher priced products are preferable, they aren’t worth the costs.
Consumers are also beginning to align themselves with conscious and sustainable values. This includes the adoption of sustainable and eco-friendly practices like growing your vegetables, using DIY solutions and recycling where possible to save costs.
2. Shopping Second-Hand and the Rise of DIY
People are rediscovering the joy of second-hand shopping amid rising prices as they plough through bargains in second-hand marketplaces and thrift stores. Though second-hand shopping was looked down upon earlier, people are saving serious money on unique finds and designer items.
The advantages of shopping second-hand are numerous. You can access quality items at lower prices and ensure a preloved piece doesn’t go to the landfill. This minimises waste and improves environmental outcomes greatly.
What’s more, recycling and upcycling are back in vogue, saving you money and giving you a chance to bring back old trends.
The surge in the second-hand goods market also has people focusing more on repairing and reusing their items. This includes using DIY solutions where possible to extend the life span of certain items or finding more cost-effective and eco-friendly alternatives.
3. Change in Energy Consumptions Habits
The energy crisis in the UK began in the summer of 2021 and continues to impact the economy negatively. With prospects for the foreseeable future looking grim on the energy front due to ongoing wars, many have felt a negative impact on energy bills.
Though budgetary policies have been introduced to support rising energy bills, energy costs in the UK are higher than those in EU countries. As a result, energy consumption habits have changed dramatically to cut down costs and save money.
People in the age group 55-75 are the ones most impacted by the rise in energy costs and the ones adopting reduced energy consumption practices. Surveys have suggested that people with disabilities are also reducing their electricity and gas consumption to tackle the cost-of-living crisis.
Both groups have seen a steep incline in essential spending, especially on food, medicines and utilities. As a result, they’ve had little choice but to adopt energy-friendly practices and cut down on consumption.
4. The Business End of Things
Businesses have stepped up to tackle the cost-of-living crisis and ensure consumers do not have to face additional costs in accessing essential services. While businesses find themselves increasingly aligning with sustainable values, ethics have also sharply come into focus among rising prices.
This is largely due to predatory pricing and unethical practices that have caused distrust among consumers across a wide range of consumer goods and services. To combat this, many businesses have toned down their marketing strategies and are now catering budget-friendly, affordable goods and services.
With the introduction of flexible payment plans and marketing strategies focused on practical considerations rather than luxury buying, businesses are trying hard to appease customers. This helps retain customers already bearing the brunt of the cost-of-living crisis and boosts brand loyalty in tough market conditions.
Conclusion
You can expect to see a transformation in consumer behaviour over the long term. This is because inflationary pressures continue to make their impact felt across a variety of consumer sectors. Consequently, people have been encouraged to live more frugal lifestyles, prioritising essentials over luxuries.
However, beyond monetary savings, people have also begun caring more about how their consumer choices are impacting environmental outcomes. As a result, consumers are now prioritising the adoption of sustainable and eco-friendly practices to save costs and minimise harmful effects on the environment.
These are some of the ways consumers have changed their habits to tackle inflationary challenges and rising prices. We hope this article has helped you understand the impact of the cost-of-living crisis on consumer spending habits better.