- By Karl Stone, head of Voyado UK
In today’s unpredictable retail landscape, understanding consumer spending habits, preferences and trends has never been more vital. Therefore, retailers operating within the current landscape need to be flexible and adapt quickly to any changes.
The recent ONS inflation basket of goods data for 2023 is an important metric for retailers to understand the current economic landscape and consumers’ attitudes towards spending. This could help retailers turn their 2023 around, as they will better understand the current consumer mindset.
The Inflation Basket: then and now
The inflation basket, which was first introduced in 1947 and features 750+ products, enables us to see the nation’s changing spending habits. For example, last year the basket showed that suits were out of the inflation basket, whereas sports athleisure wear was in. This is a direct result of both the pandemic, where people would be working from home in their comfy clothes rather than suiting up, and an emphasis on healthy living and exercise that caused sportswear sales to spike.
However, significant changes can be seen in 2023’s basket now people are not confined to their homes. It was anticipated that luxury items would make a return to the inflation basket, and to some extent this has materialised – men’s belts are in this year’s inflation basket. As people venture back out, men are now dropping the stay-at-home ‘comfy’ clothing, and opting for more ‘smart casual’ attire, making belts a necessary staple of their wardrobes.
Less related to fashion – but still fundamental to understanding the consumer spending landscape – digitally compact cameras, non-chart CDs and alcopops are out. Meanwhile, home security devices, e-bikes and frozen berries (for making smoothies) are now in the basket. This reflects a decline in overall spend and the rise of the health-conscious, environmentally aware UK consumer.
Battling with the big brands
From this, it is clear to see that consumer habits and behaviours are changing. Therefore, the question is simple: how do independent retailers adapt to changing consumer behaviour and compete? It is crucial that they leverage their strengths to differentiate themselves from the rest of the pack. Interestingly, what the big brands may deem as boutique ‘weaknesses’ may in fact be their greatest weapon.
In today’s competitive retail landscape, personalising the shopping experience is essential to retaining and expanding customer bases. Independent retailers typically have smaller customer bases than bigger brands. This more intimate setting enables retailers to get to know customers better and closely monitor their shopping habits, preferences, and frequent purchases.
Having this data on hand presents an opportunity for hyper-personalisation. For example, boutiques can offer excellent customer service and provide a curated selection of products for their customers’ individual tastes, which is difficult for bigger retailers to replicate. A tailored journey for the consumer will essentially lead to a loyal customer base, repeat purchasing, an increase in sales, better customer data and an overall competitive advantage.
Additionally, independent retailers can leverage social media platforms to reach their target audience and promote their brand. They can showcase their products, share customer reviews and testimonials, and offer special promotions and discounts.
Offering products or services not available elsewhere – or catering to specific audiences like sustainability-conscious consumers – is a great way to create a sense of exclusivity and urgency. This will encourage customers to shop with you over bigger or fast fashion brands that mass produce.
The recent BRC report showing a 20.2 per cent increase in high street footfall also presents an opportunity for boutiques to attract potential customers and establish brand awareness across channels. Independent retailers can make the most of this by offering a unique and memorable in-store experience to encourage people through the door and build long-term healthy relationships with customers.
For example, as the ONS inflation basket reflects the rise of more health and sustainability conscious consumers, independent retailers can host events that appeal to this specific demographic and toward other niche markets.
This sort of increased brand awareness leads to continued support in-store and online, enabling businesses to continue capturing valuable customer data and tailoring the customer journey even more.
Regardless of how shoppers’ preferences have changed, one thing is for sure: prices are still rising and people are still finding everything more expensive. Bigger brands will have more stores and typically sell a greater quantity of cheaper items. However, if independent retailers provide a tailored shopping experience, they can gain that precious customer loyalty.
Voyado is a marketing platform that works with several well-known high street retailers on customer loyalty, personalisation and marketing campaigns.