Convenience impacted the most as Britons cut back spending: Cardlytics

Convenience retailers are feeling the biggest impact of customers cutting back, states a new report, highlighting that Britons expect to spend at least £2000 more on essentials this year as the cost-of-living crisis continues to put pressure on shoppers’ purse strings.

According to the Cardlytics State of Spend report, consumer spend is shifting away from the big four, towards discount supermarkets. Total spend across the big four supermarkets fell 7 percent in the last year as customers tightened their belts while discounted supermarkets managed to uphold their market share. Convenience retailers felt the biggest impact of customers cutting back, with spend falling 8 percent between 2021 and 2022.

The report, based on the spending habits of over 24 million UK bank cards and the views of over 2,000 UK consumers, further states that total UK consumer spend on essentials rose by 7 percent between 2020 and 2022, driven by rising inflation, supply chain disruption and the war in Ukraine. The average transaction value rose 10 percent in this time.

Consumers are noticing the price rises on their bank balance, says the report, stating that 74 percent of UK consumers say they are now spending more on day-to-day outgoings than they did a year ago. They estimate their weekly spending has risen by £40 on average, amounting to an additional £2000 bill this year.

Hunting for bargains to keep costs down is also set to become more popular. 73 percent of consumers say they plan to shop around more for the best deals this year while 58 percent plan to use price comparison sites more frequently to find the best deals.

The price of a weekly shop has risen dramatically in the last year. This has driven shoppers to cut back on spending and switch to cheaper options. The average transaction value at supermarkets and grocers increased by almost 20 percent between 2020 and 2022, despite total spend on groceries falling by 6 percent in the same period, states the report, suggesting that as the average basket price of food increases, consumers are responding by reducing how much they buy.

As costs on day-to-day essentials rise, the report found consumers are increasingly looking to claw back spend on luxuries. This approach is needed to help pay for these cost-of-living increases. 65 percent say they plan to cut back on non-essential spending this year such as leisure activities and eating out.

Lucy Whittemore, SVP UK Advertising at Cardlytics said, “As the cost of everyday essentials continues to rise. Luxuries such as eating out or jetting off on holiday look like they may take a backseat for consumers.

“Brands across all categories are caught in the middle and are faced with a difficult question. Whether to pass increasing costs onto consumers or protect their bottom lines.

“The third option, however, would be for brands to invest in building brand loyalty. Furthermore, attracting customers at a time when they are feeling the pinch. By offering consumers tailored rewards, cashback and loyalty offers in the places they shop most, brands can create longer-term affinity and support their customers when they need it the most.”