Cost of living crisis | Reports | Rachel Cristofoli
With 81% of people saying they have less disposable income, households are having to make hard choices about how to keep their homes warm and food on their plates. It is clear there are going to be some serious mental health implications but it also appears that efforts to move towards a more sustainable future look in jeopardy.
Throughout August, Market Measures spoke to a nationally representative sample of over 1,000 shoppers to understand how the cost-of-living crisis (COLC) was impacting them and, in the first of our bi-monthly reports, we outline the results.
Three key themes that emerge from the report are the implications on mental health, the use of trading down and the negative impact on sustainability initiatives.
1) People are concerned about life becoming more limited in order to survive the COLC. 40% of people are willing to sacrifice fun in order to have more disposable income. Although the implications are clear for the hospitality sector, there are also signals of wider issues concerning mental health: 66% are concerned that life will have to become more limited in order to save money and 45% agree that their mental health has suffered with the pressures of the cost-of-living crisis.
2) Although trading down is an area of focus, it doesn’t need to mean a race to the bottom. 91% of people believe that shopping has become more expensive but how they manage those price increases differs. 39% of people are trading down to cheaper like-for-like alternatives and 38% looking to alternative retailers for cheaper options creating a great deal of mobility within the market. However, with money being moved away from pubs, restaurants, and bars (40% planning to cut back here in order to compensate for COLC), scratch-cooking and at-home occasions are likely to see an increase. This presents an opportunity for those brands that can play a role in these moments.
3) Sustainability initiatives will suffer during the COLC. With cutbacks across all areas of spending, shoppers are having to make tough choices between remaining committed to environmental causes or simply focusing on what is cheaper. The number of people who say the environment has dropped down their priority list has increased by 20ppt to 54%. Similarly, twice as many people are placing less emphasis on sustainable choices when shopping. It is not hard to understand why. Purpose-driven shopping will have to take a backseat when shoppers are struggling to afford even the basics
This is all against the backdrop that we are, potentially, only at the start of the real pain point for the COLC. With 42% of people already struggling to meet the cost of household bills – despite the major increase not hitting until October – this burden is set to become greater.