Brexit Will Mean More of the Same for UK Consumer Trends in Grocery, says Canadean
24 June 2016
The UK’s decision to leave the European Union, also known as Brexit, will cultivate a ‘doubling down’ on current consumer trends in the near-term, according to Canadean.
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. Various assessments from the Bank of England, the Institute for Fiscal Studies and the International Monetary Fund place the long-term hit on total annual income at anywhere between £3,000 and £5,000 five years after the UK formally leaving the EU.
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.
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.
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, Canadean concludes.
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