A newly launched quarterly survey from JWT London, called The Austerity Index, has found that prolonged economic adversity in Britain is drastically altering consumer spending habits. These tough times are producing a nation of savvy budget tacticians who rely on cost-cutting strategies to make their money go further—92% of Britons use at least one coping mechanism to save money. Tracey Follows, Chief Strategy Officer and Executive Partner at JWT London, observes, “No group has escaped the bite of Austerity Britain.”
The JWT Austerity Index is a new in-depth quarterly research survey from JWT London that analyzes the impact of prolonged economic adversity on UK consumers and markets. The Austerity Index aims to diagnose Britain’s emotional and rational reply to austerity, delivering the answers that brands and organizations need to understand these thrifty consumers.
Tracey Follows of JWT London explained the insight behind the creation of The Austerity Index, saying, “This is the slowest recovery in living memory and Britons continue to battle depressed incomes and spiralling prices. JWT London thinks it’s crucial to understand exactly what’s really going on under the bonnet of Britain as a result. … Our preliminary findings are fascinating, proving that super-savvy consumers have stepped up to the austerity challenge and taken forensic responsibility for their spending.”
An analysis of individual expenditures in low-income households, earning under £20,000 before tax per annum.—almost half the national average of £37,700—revealed that each week, to pay for necessities like groceries, toiletries, gasoline and travel expenses, Britons spend an average of £91—this amount excludes any money used to pay the mortgage, rent payments or bills.
After purchasing these essentials, over a third reported they had no money left over at the end of the month. A third reporting having just £50 left over, equating to a mere £12 per week in additional spending money. Respondents reported making very significant efforts to cut back on unessential spending: 32% of those surveyed rated their efforts to restrict discretionary spending a full ten out of ten.
See the below table for the top ten categories where this group is making sacrifices:
JWT London’s findings suggest that being a thrifty consumer is now a way of life for many in the UK, not just for those in low-income households. A few behaviors in particular demonstrate that these British consumers are prepared to put in work to save money:
- 53% use coupons
- 19% check price comparison tools
- 17% shop at discount stores
- 24% use cash-back sites when shopping online
- 19% have switched their utilities suppliers to save money
Another trend on the rise among all economic groups is finding new ways to generate cash. A notable 51% are selling, or plan to sell, items at personal garage sales or online via auction sites such as eBay. Data shows that those in higher income households are even more likely to have adopted these habits (95% of them) than those in the lower-earning demographic (89% are doing so).
Insights from this Austerity Index were compiled from a survey of 520 UK adults in March 2013 using the JWT SONAR panel.
Download the entire The Austerity Index report here.