Value for money and Values for money
Brands will need to demonstrate how they can offer consumers the best prices. Some advertisers, such as Superdrug and Iceland, have already put into place price freezes on selected product ranges. These retailers will launch campaigns to highlight their value for money in the hope to retain market share. The likes of Tesco and Sainsbury’s will need to keep existing customers in search of cheaper baskets from migrating to the discounters. Tesco has just launched its ‘Better Baskets’ healthy living campaign which aims to signpost shoppers to nutritious options in store. It will make these affordable through inclusion in its Clubcard Points, Low Everyday Prices and Aldi Price Match offerings. Elsewhere, Iceland has launched a discount day for elderly shoppers to support those struggling with higher food bills whilst Boots’ new campaign was created with the cost-of-living crisis in mind, highlighting 1,000 essentials under £2.
‘Budget’ will become an appealing category to consumers outside its normal customer base. Budget holidays, for example, will be in demand, so price comparison and travel search engines such as Expedia, On the Beach and Lastminute will play a big role. Expedia recently rolled out a new TV ad voiced by Ewan MacGregor who tells viewers that no matter where they travel, they will have got the best deal with Expedia. Other types of price comparison sites will be helpful to consumers during this time, so keep an eye on Moneysupermarket, Comparethemarket.com, Confused.com, and PriceRunner which was acquired by Klarna earlier this year.
Loyalty schemes are likely to crop up from various brands. While supermarkets and retail brands such as Tesco, Boots and Nectar will be promoting the points and money-off vouchers consumers can earn from shopping with them as opposed to a competitor, there will also be more unconventional loyalty schemes. For example, the shoe store Schuh has just launched its first loyalty offering. In times of trouble, people tend to stick to what they know and loyalty schemes will help reward those customers, making them more likely to stick with these brands for the long term.
Stores doing their bit
Co-op and Microsoft have teamed up to help reduce food wastage by launching a new technology platform called Caboodle, set to save hundreds of thousands of tonnes of edible food from being thrown away. The new platform will allow supermarkets, cafés and restaurants to connect with community groups and volunteers to redistribute surplus food. Caboodle is currently being tested out in Co-op’s food stores in Northern Ireland, Milton Keynes and London, and will go live next month across a further 2,500 food stores. It is opened to charities and community groups of all kinds, from food banks and family support networks to youth groups, schools and more.
Lidl has introduced an industry first, ‘Good to Give’ trustmark initiative as part of its plans to help diversify and increase food donations across the UK as more people increasingly rely on food banks to get the varied diet they need. Through the partnership, Lidl has identified 30 food items which are ‘Good to Give’ and modelled on the NHS Eatwell Guide. The products include tinned fruit, lentils, mackerel, brown rice and noodles. Items can then be dropped off by customers at food donation points in-store to allow them to be collected by local food banks and community projects. Lidl said the move is an industry first and forms part of its ongoing commitment to make good food accessible to everyone. The news comes in response to the cost-of-living crisis, with over 9 in 10 charities believing that it will have a significant impact on their organisation and the communities they serve.
Boots has revealed it is freezing the prices of over 1,500 products to ensure they “remain affordable” for customers. Prices will be locked until the end of the year as part of Boots’ Price Lock Promise. Over 11,000 Boots brand products are now available from as little as 40p, with 100 lines priced £1 or less and 1,000 products at £2 or under. The list of products spans several categories such as toiletries, haircare, dental, health, wellness and beauty. “In pulling together the list of products to include in the Price Lock Promise, we reviewed the lines that customers buy most regularly as well as those that are deemed to be day-to-day essentials”, Boots Chief Customer and Commercial officer Steve Ager said. “We want customers to feel reassured that the prices of a large selection of health and beauty favourites will be staying the same, helping them to continue to buy the quality lines they love at Boots.”
Non-essentials will be the first to go
KPMG’s research found that people are holding back on ‘big-ticket’ purchases such as furniture and electricals, and are spending less on takeaways, dining out, pubs, clubs and subscription services. Clothing brands, cosmetics and luxury goods could also be affected.
Non-essentials brands will need to supercharge their CSR efforts and invest in marketing campaigns to showcase such work to demonstrate their ‘values for money’, convincing the consumer that they are investing in more than a commodity. This applies to all retailers but particularly to those which could see customers withdraw spending.
The likes of Deliveroo, Uber Eats, JustEat, Dominos, Pizza Hut, Nandos and Greene King will be taking a hit and will need to advertise to be front of mind when consumers find the spare cash to indulge. Other brands which may see customers retreat include gym brands such as The Gym, David Lloyd, Nuffield Health and Pure Gym. Advertising will need to centre around offers to entice customers with a good deal. Clothing will be another category which shoppers will be holding back on. Shein, famous for its cheap, fast fashion, has just launched a ‘purpose -driven’ range that will support women’s empowerment projects worldwide, bolstering its appeal to people looking for an investment in more than clothing. JD Williams also recently launched a new sustainable brand called Anise.
Energy brands, though forced by the hand of wholesale prices brought on by events around the globe, have become associated by consumers with their extortionate household bills. These companies will aim to advertise themselves as socially responsible suppliers. British Gas recently released an ad starring a single dad turning off every light and radiator in his home to save money, before highlighting the support it can provide through its charitable arm the British Gas Energy Trust. You should also keep an eye on the likes of BP, E.ON, EDF, OVO Energy, Power NI, PodPoint; and on green energy providers Ecotricity and Good Energy.
When looking for home appliances, energy-efficiency is going to become key, which handily ties in with highlighting environmental efforts. Households have started swapping central heating for electric heaters to heat a single room being occupied, rather than wasting money and energy warming a full home. Brands in this category will be innovating at speed and be ready to showcase their suitable wares. With kitchen appliances being some of the most energy consuming, brands to watch include Whirlpool, De’Longhi, Smeg, Bosch, AEG, Hotpoint and Electrolux.
Any businesses offering improvements to home construction will do well to promote their services, particularly those offering insulation such as roofing, double glazing (Anglian, Clearview, Everest) or solar panels (Eco Energy Solutions, SolarTogether, Project Solar). With money saved during the pandemic and an attitude shift towards preserving the planet, people who can afford to may look to make a long-term investment in energy efficiency for their home. Octopus Energy has recently partnered with Ilke Homes to offer a renewable energy scheme guaranteed to leave households with no bills if customers add on £8-£9k when buying a new home.
Brands in the finance sector will be busy advertising their offerings as consumers look to seek out the best rates and apps to manage their finances. People will be looking for how they can make their money today go further in the future and will be turning to products such as ISAs in the hope to see gains later down the line. Those offering ISAs include Nationwide, Santander, Skipton, NatWest, Halifax, Marcus and Royal London. The trend towards investment in stocks, shares and cryptocurrency is set to continue, but consumers will be cautious and look for campaigns from financial brands that inform and educate them on how they could be affected by their investments. Investment platforms that could soon be advertising including AJ Bell which has just launched a new, simplified investing app called Dodl; Interactive Investor which was recently acquired by Abrdn; and Hargreaves Lansdown which is planning to increase investment in its financial advice offering in the hope of retaining its wealthiest clients.
Consumers more than ever want better insight into their spending habits and the ability to control spending. This means that apps such as Revolut and Monzo will be innovating, and banking apps will be looking to offer the same as their more modern counterparts. Peer to peer lending has started to take off with apps allowing investors to lend money to those who need to borrow. With any innovation will come marketing spend.
As with energy brands, finance advertisers in general will be looking for a new approach aimed at showing consumers how they can support them and their families. A similar approach will be adopted by banks and fintech targeting small businesses whose cashflow is more likely to be impacted by rising costs as they already sell at higher prices in exchange for a local and more personalised service.
Second hand to become first choice?
When consumers need to make big ticket or non-essential purchases we can expect a shift towards second-hand websites. The likes of eBay and Gumtree have an opportunity to attract a new type of customer during this period. eBay has just signed a partnership with Love Island, expanding its appeal to a younger consumer base. The trend for second-hand apparel will be ramped up as consumers use the likes on Vinted and Depop to get their hands on quality clothing at more affordable prices. Meanwhile, online retailers such as Farfetch are launching and expanding their own preloved marketplaces, offering a sustainable, more affordable way to shop in return for items with a longer life span.
Food redistribution sites such as Olio and Too Good to Go will come into their own as they offer discounted food close to its use-by date to feed families faced with rising food bills. Olio has recently hired Otherway to evolve its strategy and positioning, and to rebrand and launch its new look.
Taking a chance
There has been a social media trend towards people purchasing return pallets, where a retailer sends a consumer a delivery of unknown returned items for a hugely discounted price, with stories of people bagging themselves useful and usable home appliances such as kettles and toasters. Such items may be kept by the receiver or posted on resale sites to earn some extra cash.
People will be more likely to invest their time in competitions and couponing to afford themselves more luxury and non-essential items. See Omaze and People’s Postcode Lottery.
Back to basics?
As people become more frugal, we will see a ‘back to basics’ attitude. This extends to the cosmetics and clothing categories. Consumers are going to shift away from frills and opt for more versatile items. This will work in favour of brands such as Uniqlo who specialise in high-quality wardrobe staples. With purse strings tightened for cosmetic purchases, shoppers will be looking for neutral make-up that will outlive trends, and if forced to choose between skincare and make-up, skincare will be the winner.
Households with multiple cars might sell off their second cars. This is where used car sites such as Cinch, Cazoo, Motorway, CarWow and AutoTrader will come into play. People may also switch to the more economical option of cycling, so brands such as Ribble, Upgrade Bikes, Swytch, VanMoof, and Raleigh which has just launched its New Motus Tour Plus e-bike, should think about advertising.
People come together in times of crisis. Those who can will support good causes, particularly as the rising cost of living will hit those most vulnerable in society the hardest with benefits failing to rise in line with inflation. Recent research by CAF found that 86% of charitable organisations are worried about the impact cost-of-living increases will have on those depending on their services. 71% of charity leaders expressed concern over managing increased demand for their services and 59% are concerned that people will not continue to or begin to donate to their cause because of the cost-of-living crisis. Charities that will appeal for support include those supporting the elderly (e.g. Age UK), children (e.g. The Children’s Society), people with disabilities (e.g. Leonard Cheshire) and people with illness (e.g. Macmillan Cancer Support, Young Lives vs Cancer). And let’s not forget those charities supporting the homeless (e.g. Crisis), providing support to the mental health challenges brought on by money-related issues such as Mind and GambleAware, and those supporting animal rescue for those no longer able to afford to keep pets (e.g. Animal Rescue Foundation, Battersea Cats & Dogs Home, Dogs Trust, RSPCA, Blue Cross, Cats Protection). Citizens Advice, The Energy Saving Trust and food bank charity The Trussell Trust will also want to promote their services.
Sanitary products have risen in price and the rising cost of living has increased period poverty. Hey Girls is a charity that supports women and girls facing this. Other sanitary brands such as Always, Tampax, Bodyform and TENA should also be showing how they will support people and that their products are both environmentally friendly and good value for money. Bodyform has recently appointed Mother to run a campaign for its period pants across Europe and LATAM. Its owner Essity and charity partner In Kind Direct donate 100,000 sanitary pads per month to a network of charities across the UK.
The UK is likely to see the highest inflation across the G7 in April and economists expect the situation to persist until 2024. The broad nature of UK inflation raises the question of whether the Bank of England has the appetite to take sufficiently tough action to tame it.
While economists expect inflation to begin to fall later this year, there is an increasing concern among business leaders that excessively high price rises will persist. The Institute of Directors, a business lobby group, found in a survey that only 28 per cent of those questioned last month thought inflation would fall to the Bank of England’s 2% target by the end of 2023, down from 33% in April.
By Natalie Fedden
Senior Content Executive, ALF
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