The phrase ‘cost of living’ is engrained in all our minds, and it’s clear that consumers are already looking at ways to navigate the storm.
So, as advisor to a portfolio of brands that are some of the biggest players across the UK’s pubs, bars, restaurants and nightclubs, we joined forces with our research partners at Censuswide to find out exactly how the current spending squeeze may be about to affect consumers’ purchasing behaviour out of home.
… And some clear food for thought, particularly for brands and venues looking for consumers to keep on spending with them through good times and bad.
At their best, consumers are certainly being realistic – and at worst pessimistic – about the impact that the current economic situation is going to have on the cost of a night out, with almost one in three predicting they will have to increase their spend by 10%.
A further one in four are planning to either keep their budget for nights out at the same level as it is or increase it slightly to keep pace with rising costs, but almost half – 47% – say they are planning to reduce their spending… and many significantly.
We found that the overall effect of this could be a -6.9% reduction in on-trade spending overall.
And whilst younger adults – those aged up to 24 – may be looking to buck the trend by increasing their own spend on a night out by an average of +6.2%, it is unlikely to be enough to offset the anticipated reduction in spending by their older counterparts.
It also seems these spending changes will be felt differently across the UK, with the biggest spending drops potentially set to come in the South West, followed by the East Midlands and then Yorkshire & The Humber. Consumers in Greater London, Northern Ireland and the North East, meanwhile, are feeling a little more resilient… but, even so, all are still going to level out as net spending reducers.
Well, for starters, operators should be honest about the effect that rising prices are having on their businesses. Our study found that one in five people think venue owners should be open and honest about rising costs to soften the blow and improve consumers’ understanding of the challenges they are facing.
Secondly, think about how you can keep on luring customers in. Our study found that more than 40% of consumers still rely on word of mouth recommendations from friends and family as inspiration for visiting a venue themselves, and similarly one in three said recommendations from said family and friends via social media are helpful. So start thinking about the tools you have at your disposal to draw in a wide range of customers – SEO, consumer review portals such as Trust Pilot and TripAdvisor, money saving vouchers and media reviews all have a role to play, as does venue generated content on social media.
In addition, think about what role special offers, incentives and loyalty bonuses have to play within your marketing mix – all important motivators, according to our findings – whilst enhanced service and choice will remain important for one in eight customers, irrespective of the economic climate.
And if you want to know more, then please get in touch.
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