Savanta has released its Q3 reports for the Consumer Compass and Grocery Eye. The goal of this work isn’t just to provide businesses with a snapshot of today’s consumers – it’s to help you understand how they’ll behave tomorrow.
This report explores how consumers feel about their current and future spending habits and examines their knowledge and awareness of topics that can be crucial to a brand’s success during periods of economic instability: sustainability, understanding of new technologies, and many others.
This quarterly study surveys 3,500 European consumers in the UK, Netherlands, Germany, France, Spain, Italy and the Nordics and includes:
» A Consumer Confidence Index (CCI) linked to current and future spend across markets
» Analysis of sectors-at-risk
» A profile of differences across European markets.
For brands that seek to be agile, proactive, and dynamic during this period of flux, the Savanta European Consumer Compass is an invaluable tool to help marketers and product owners alike understand the needs of consumers, and ultimately, make better decisions.
European Consumer Compass:
The latest wave of the Savanta European Consumer Compass demonstrates that consumers remain cautious, but a temporary stability has been reached across most markets. Three major themes have emerged from the latest data:
Reaching a ‘new normal’: Confidence seen in most markets is gradually improving, with notable strides in Germany. Italy too sees an uplift this quarter. However, the overall sentiment remains fragile.
Discretionary spend still restricted: Whilst inflationary pressures are generally easing across Europe, spending on non-essential categories remains restricted, suggesting the cost-of-living crisis has left a residual mark on household budgets. Younger generations are the most likely to spend the most in discretionary categories but place more emphasis on brand ethics and values when making choices.
Health is key, but habits are changing: Health and wellbeing is a key focus area, with only two in five consumers rating their health as ‘good’. The picture is nuanced across sub-groups, with a growing acceptance of alternative health solutions in the UK and amongst younger consumers. There is a new avenue emerging for brands who are able to play authentically in this space to engage with consumers.
There are signs that all markets are starting to find relative stability in terms of confidence; Germany is in strong growth and Italy is up in the latest period.
Economic confidence amongst European consumers is fragile but stable, with the exception of France which falls significantly this period.
Perceptions of disposable income have improved significantly in Germany, Italy and Spain this quarter, with France falling back.
Perceptions of job security have generally improved across Europe, with Italy, Spain and Nordic markets all seeing significant gains on this measure.
Savanta tracks the progress of four groups – defined by socio-economic attitudes – to go further than demographics to understand consumer resilience to economic downturns. Insulated consumers are aware of the problems in the wider economy, but it has not really affected them personally. Cautious consumers are being a bit more cautious about how much they spend and are saving a bit more. Squeezed consumers are taking action to buy cheaper brands and/or going to less expensive shops. Sufferers have cut all of the expenditure that they can because they are really worried about the future.
Resilience groups continue to be stable, with a general increase in those moving into the ‘Cautious’ segment from ‘Squeezed’ and ‘Sufferers’.
As we approach the first budget of the new Labour government in the UK, consumer confidence is relatively stable period-on-period, but future expectations of the economy remain pessimistic, with around 4 in 10 (41%) UK consumers disagreeing that they feel more confident about the current economic situation compared to a few months ago.
Similar to other markets Savanta tracks across Europe, household expenditure remains focused on the essentials, despite an improved picture in terms of the cost of living, and essentials such as food and fuel.
Whilst spending on essentials such as petrol has fallen vs. Q2, spending on discretionary categories remains restricted.
Spending on non-essentials has not risen at the same pace as the easing of inflation, suggesting that the recent period has left a residual mark on household budgeting.
Predicted spend suggests consumers are tightening their wallets further as we head into Q4.
Gen Z are spending the most on non-essentials of all generations, with less of a focus on price making them more likely to scrutinise brands.
Only around 2 in 5 consumers rate their health between 8 and 10, and this score worsens significantly as financial resilience decreases.
The focus on mental health amongst younger generations is clear, with over half of Gen Z prioritising mental over physical health.
Engaging in exercise, having a balanced diet, and adequate sleep are top of mind when it comes to health & wellbeing.
The majority of consumers seek professional support when it comes to their health, but younger consumers show openness to taking advice from consumer brands.
The UK is more open to non-traditional practices when it comes to health & wellbeing, but this has not funnelled through to their engagement with brands in this space just yet.
When selling health & wellness products, professional recommendations will help boost credibility and encourage purchase, but there are generational differences to be aware of.
Understanding market & audience
The fluctuating nature of consumer confidence across different markets underscores the need for brands to keep a close eye on their target audiences. Tools like Savanta’s AI trend tool, TrendVue, can provide real-time insights into changing trends and behaviours, enabling brands to make informed decisions and tailor their strategies accordingly.
Optimising innovation
With spending on non-essentials remaining flat, brands should explore innovative ways to offer value and meet the evolving needs of their consumers. Our expertise in innovation development can guide brands in creating products or services that resonate with their target audience and stand out in the market.
Driving return on marketing spend
As younger generations show less focus on price and more on brand ethics and values, brands have the opportunity to engage this demographic with authentic content and experiences. By effectively targeting marketing efforts, brands can maximise their return on marketing spend.
Increasing brand equity
With overall confidence in the economy remaining fragile, building and maintaining trust with consumers is crucial. Brands that successfully communicate their efforts towards sustainability and ethical practices can not only increase their brand equity but also capture a larger share of consumers’ wallets.
Delighting customers with experiences
Despite the economic uncertainty, there is a significant opportunity for brands to delight customers with unique experiences. Whether through innovative product offerings or engaging marketing campaigns, brands that prioritise creating memorable experiences for their customers can foster loyalty and drive growth.
UK Grocery Eye:
The Grocery Eye has been running since 2014, surveying 500 UK Nat. Rep. Shoppers each quarter to provide a snapshot of today’s consumers. Over the course of the year, the Grocery Eye covers grocery shopping behaviour with a focus on 4 key topics: healthy eating, catering for special diets, sustainability, shopping missions and occasions.
Combined with other proprietary tools and sector experience, the Grocery Eye reports aim to understand audiences and explain today’s behaviours to better anticipate tomorrow’s.
Julie Vigne Senior Research Director, Brands, comments: “When it comes to sustainability, the main challenge we discuss with our clients is the say-do gap: most consumers will say they want to act and buy responsibly but actions often don’t follow. And data from this wave of the Grocery Eye certainly confirms this.
“So, in this report, we focused on the expectations but also barriers to buying more sustainably:
• What do shoppers see the role of brands and retailers to be?
• What elements of sustainability do shoppers want brands to focus on?
• How and where to communicate about sustainability.
“Sustainability remains a complex topic but the appetite is there if brands and retailers can make it accessible, with rewards for all to enjoy, including the planet!
“We are working with our clients to help them grow their categories by better understanding their categories, navigating food & drink trends and identifying and leveraging key needs, decision drivers and influences at point of sale and beyond, from communications to NPD.”
Thre are 5 key trends shaping sustainable practices. Whilst consumers want to make sustainable decisions when it comes to grocery, general confusion and difficulty in identifying sustainable products are key barriers. Yet this interest does not always translate into action – especially for the younger audiences. Consumers need more reasons and fewer barriers to take action.
Brands and retailers are expected to play a large role in promoting and implementing sustainability, offering consumers more sustainable options.
Sustainability messaging needs to be made abundantly clear at fixture but the traditional certifications, although reassuring to see, are becoming more irrelevant.
Whilst packaging and other traditional indicators of sustainability remain important, no one aspect of sustainability really stands out, allowing retailers and brands to select an area authentic to them.
Consumers want to be sustainable but confusion means that further education is needed to support more sustainable decisions. 72% say their grocery purchasing decisions are influenced by the desire to be sustainable. 30% of respondents say it is difficult to know whether a product is sustainable.
As a result, this desire to be more sustainable does not always translate into action. 95% consider acting in a sustainable way. However, over a quarter still do nothing. Food waste, highlighted as the most important sustainability issue (62%) is only currently being acted on by 38% of consumers.
Gen Z are even less likely to take action than older consumers. Maybe because the personal benefits are not strong enough. 50% of Gen Z say they adopt sustainable behaviours to benefit themselves, higher than any other reason (44% total).
And consumers have high expectations from brands and retailers to help.
To be effective, sustainability messaging needs to be strong at point of sale, especially amongst older consumers.
KitKat is working to communicate sustainability and ethical standards in a variety of ways across media. Launching “Breaks for Good,” a “no cocoa” campaign to show the importance of cocoa farmers, its messaging is clear in-store, on-pack, on social media, and on a dedicated website page, ensuring people see the campaign as well as providing the opportunity to find out as much information as they want.
Usefulness of certifications is mixed. 1 in 3 look for certifications on products as reassurance supermarkets are acting sustainably, but awareness of the largest certifications has decreased compared to last year – likely because of the number and complexity of schemes.
Packaging remains the main sustainability cue in the sector.
And brands know it there was a large focus on pack innovation supported by strong POS activation and promos in the last few months.
Although packaging is still important, its role as an indicator of sustainability is declining, leaving space for other aspects to come to the forefront.
As all aspects of sustainability are important to consumers, it gives brands an opportunity to pick their topic(s) of choice. Whilst food waste and animal welfare come out as the most important sustainability matters, the plateau of scores demonstrates the lack of clarity of action behind ‘being sustainable’.
With many options to be more sustainable, brands and retailers are taking a variety of actions already, including: introduction of electric vehicles to reduce carbon emissions; reduction in packaging where available to reduce plastic waste; drawing focus to local and seasonal produce; lower climate impact promises; donations to environmental causes to help support the environment; removal of expiration dates and creating “Too Good To Go” boxes to reduce food waste; commitment to paying fair wages for workers and suppliers; and a focus on British farmers and produce.
Brands and retailers are expected to play a large role in educating, informing and offering sustainable solutions. Communicate about your sustainable initiatives.
Consumers struggle to translate their desire to be sustainable into action and they expect you to remove barriers and make it as simple as possible.
Shoppers find sustainability confusing and struggle to identify which products are most sustainable. Use visuals and simple language to explain why your products are sustainable. Leverage certifications if relevant, but don’t feel tied to them.
Ensure that the benefits for the consumer are clear too. Gen Z in particular are looking for personal benefits as well as the warm glow of contributing to a better future.
Packaging remains the first sustainability cue for shoppers, both in terms of the type of packaging and its use as a channel to communicate about sustainability, but its role is on the decline. POS is increasingly important too.
As many aspects of sustainability appeal, retailers and brands have an opportunity to select which aspects they can focus on, in a way that demonstrates their genuine efforts to be credible.
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