New research from QuMind, the consumer insights platform, has found that nearly three-quarters (72%) of Brits are swapping out branded for non-branded products as consumers continue to feel the effect of inflation on the cost of living.
Almost all (96%) of Brits say the cost-of-living crisis continues to impact their spending – remaining consistent with polling from October 2022 (also at 96%). And the situation is unlikely to improve in the second half of the year, with the consumer insights predicting a net percentage decrease in spending non-essential items, including a decrease of 23% on fashion, 20% on cosmetics, 10% on holidays, and 8% on eating out over the coming six months compared to the first half of the year.
The pressure is being compounded by the rise in mortgage repayments and rental costs. 21% say their monthly payments now account for over 50% of their total income – rising to one-third (32%) of 25-44 year olds – as 49% of the population are concerned about their household spending against their income.
Brits swapping to non-branded products
To help reduce their expenditure, 38% are choosing to change their purchasing habits by buying more non-branded products. The most common product swaps for non-branded products are food and beverage (49%) and household products (33%). Electronics and sports equipment/apparel are sheltering from this trend with just 11% of consumers reporting swapping from branded items for these products respectively.
To retain customers, brands need to understand what reasons they are choosing their products over non-branded goods. Overall, quality is the main driver for consumers of branded products; either because it tastes or works better (44% and 26%) or because it lasts longer (32%).
Sustainable production is also a driver for 19% of Brits but appears to have lower influence in the current economic climate. For example, when faced asked to rank how brands should respond to the cost of materials crisis where they can no longer offer their products at the same price, making concessions in sustainability efforts was ranked first by 37% of Brits, over reducing size (31%), increasing price (23%) and reducing quality (9%).
How brands can retain customers
Brands need to understand what will retain customers and encourage those buying non-branded product to switch to theirs. When asked the reason for swapping from non-branded to branded products, the top ranked responses were:
· Offers, such as multi-buys and discounts
· Comparable price to non-branded products
· Perceived improved quality of branded products
Mark Ursell, CEO of QuMind comments: “Our analysis shows that FMCG companies are in for a difficult second half of the year with more customers actively looking to reduce their spending on branded products for more cost-effective, non-branded alternatives. These brands therefore need to get a clear understanding of what qualities attract their customers and double-down their advertising and marketing efforts to ensure they are brought to the fore in consumers’ minds.”
