KEY TAKE AWAYS
1 Sharing is caring
The sharing economy has gained a strong foothold in the UK and is expected to grow by 60 percent this year, led by Uber, Airbnb and Deliveroo. There’s more to the popularity of these new ways of living than simply price and convenience. The rise of these platforms links to people’s desire to share their lives with the brands they feel echo their own priorities and sense of purpose. These are seen as disruptor brands that don’t just offer choice, they represent an alternative to the mainstream, even as they become mainstream themselves.
2 Families have changed
It used to be that families comprised a husband and wife and 2.4 children; in the UK now, households are less likely than ever before to look like this, and brands have been somewhat slow to reflect the change. There are almost 8 million single-person households, as well as many multi-generational households and co-habiting couples. This means that not everyone’s buying family packs, buying into traditional family imagery in advertising, or even finding a use for “buy one, get one free” offers. Some brands are breaking the mould in their advertising and moving away from nuclear family traditions; supermarket Sainsbury’s and holiday company Thomas Cook have recently featured gay couples in their TV campaigns.
3 Oldies are goodies
The average age in Britain has now hit 40, making the UK one of the world’s older nations; over-55s make up one third of the population. Brands are often in hot pursuit of the youth market, looking to build relationships with the consumers of tomorrow, but to overlook older people in the UK is to miss a huge swathe of the population – and one that’s likely to have more money to spend. Habits we used to associate with middle age and beyond is changing; people are working longer, living longer, buying cars, running marathons and generally living more active and outgoing lives than their own parents and grandparents did. They’re affluent and sociable, and brands need to look beyond stereotypes if they are to capitalise on the growing “grey pound”.
4 Health is a serious business
The search for good health is a sizeable phenomenon in the UK – almost as large as the nation’s waistlines. Almost two-thirds of the adult population is overweight, but consumers know they need to act, and this is reflected in the products they are choosing to buy. The proportion of meals featuring an ingredient specifically chosen for health reasons is now 38 percent, up from 19 percent in 1980. Other changes are taking place more rapidly; salt and fat used to be seen as the enemies of healthy eaters; now many people are cutting back on sugar. In just the 12 months to June 2016, sugar consumption declined by 1.8 percent, with sweet snacks particularly affected. Consumers are moving away from items marketed specifically as diet products, and towards less-processed items they associate with health. There’s also a rise in “flexitarianism”, which is consumers opting to being meat-free some of the time, and the Vegan Society reports there are now 540,000 vegans in the UK, up from 150,000 a decade ago. What’s worth remembering is that those consumers most concerned about their sugar intake spend £5 more per week on their groceries than the average shopper. Simplicity - in products, labels and communications - is the answer.
5 Premium is feeling the pinch
After two years of grocery prices on the whole going down, prices have recently begun to climb, and given that people’s wages haven’t moved in the same direction, many consumers are having to make trade-offs when they shop. Many manufacturers have been adjusting pack sizes, offering smaller amounts for the same price, so that shoppers can stick with their favourite brands without having to pay more for them. Consumers are, however, buying a smaller number of premium products, and premium includes everyday categories such as razor blades. This is significant as brands look to innovate, given that innovative new products generally come with a premium price tag roughly a third higher than existing lines. The need to project value for money and sense that a product is “worth it” is therefore more acute than ever.
6 The little things really count
There’s not a lot of large-scale splashing of cash going on in these austere times, but there is a counter-trend in food and drink of “indulgent luxury” that provides some light (or possibly full-fat) relief from the widespread financial belt-tightening. Retailers and brands are feeding people’s appetite for a “cheat meal” or little luxury. These little pleasures are particularly important to young people, for whom saving up to buy a home at times feels like an impossible dream; but in the meantime they can indulge in luxury profiteroles and prosecco, or a top-of-the-range coffee. Biscuit maker McVities has expanded into the sharing bags confectionary category with its Digestives Nibbles range, targeting what it sees as the emerging evening treat occasion. And Marks & Spencer puts the idea of living for the moment at the heart of its “Spend it well” tagline, which covers its food, clothing and other lines with a unified call to action to focus on quality experiences and the people and things that really matter.
7 Look beyond London
The UK’s capital is where much of the country’s wealth is generated, where business headquarters tend to be and, because of its large and cosmopolitan population, where trends tend to start and early adopters tend to live. But only 13 percent of the country’s population actually lives here, and those outside London, and particularly those living beyond the southeast of England, often feel overlooked. If a campaign has a national audience, think more widely and be more inclusive, or consider adapting content for different regions. The Co-op supermarket chain recently ran as series of short films featuring local community heroes, tailored to different parts of the country. For some brands, an overtly “non-London” message will work well, as with Yorkshire Tea’s deployment of local triathletes the Brownlee brothers to show viewers nationally what’s “proper”.
8 E-commerce is increasingly m-commerce
Britain is a nation of online shoppers, and for many of them, the mobile phone is their tool of choice when it comes to browsing and buying. Six in 10 internet users say they shop online at least once week, and four in 10 mobile phone users say they use their device to browse shopping websites or apps at least once a week. Smartphone owners spend an average of 66 hours per month browsing online on their phones, which helps explain why Brits are spending more money online than their counterparts across the English Channel. Online grocery is a growing part of the digital basket; all major supermarkets offer online shopping, and digital-only supermarket Ocado grew at 10.7 percent last year. By 2025, it’s predicted the 12 percent of fast-moving consumer goods sold in the UK will be purchased online, compared to 9 percent in the US and 4 percent in Germany. But this doesn’t just mean brands and retailers need good mobile web sites. Shoppers’ expectations of delivery and other services have increased as a result of their experiences online. They think: if Argos can deliver in three hours, and Amazon in just one, why would anyone else need more than 24?
9 Discounters are for everyone
Cut-price supermarkets like Aldi and Lidl used to be frequented by only those people who needed to shop there. Since the 2008 economic crisis, however, discounters have gone mainstream. Shopping there has shed its shabby connotations, and the stores themselves have smartened up, gradually introducing better lighting and displays, more fresh produce and improved service. Communications campaigns like Lidl’s “Every Lidl helps” have challenged perceptions around quality, and the discounters are the fastest-growing chains in the sector. In 2016, the discounters had 86 percent penetration and 14 percent value share of the market. Buying from discounters is seen as smart, not stingy. Both Aldi and Lidl are growing at over 18 percent per year.
10 Small is the new big – if it’s nearby
Convenience is king, and more British shoppers are hitting stores regularly – even daily – rather than driving to a large supermarket to stock up for a whole week. In the UK, micro formats such as Tesco Express and Little Waitrose are thriving. It is these smaller shops, with carefully curated selections that often vary significantly in different parts of a city, and which are heavy on ready-to-eat or ready-to-heat meals, that are powering growth for the supermarkets in the mid-price range, such as Tesco and Sainsbury’s. Brands must respond to this trend wisely, with not only the products but the pack sizes that suit the “buy for tonight” shopping occasion. Convenience channels are tipped to grow yet further, by up to 18 percent over the coming five years.
11 Environmentalism is mainstream
Consumers are thinking green and are willing to pay a little extra if they know they’re helping the environment – or at least that they’re doing as little damage as possible. They’re warming to the idea of more environmentally friendly cars, for instance, with the number of hybrid and plug-in electric cars now at 90,000 across the country. They’re also buying more organic food and drink, with organic sales up by 7.1 percent in 2016 despite an overall flat year for grocery in the UK, making the organic market now worth about £2 billion a year. Buying local is also on the rise, as it shifts from being seen as somewhat parochial to “doing the right thing”, supporting local farmers and reducing “food miles” – the distance between farm and fork – out of concern for the environment.
12 Going green is not enough
Being a responsible brand is about more than using recyclable packaging and planting some trees. Social responsibility means considering a community, being a good employer, and having a bigger purpose on which your brand is willing to take a stand. Consumers are buying Fairtrade products despite the squeeze on household budgets, and supermarkets Waitrose and Co-op are increasing their Fairtrade commitments in wine and coffee, signalling that consumers are willing to pay for what they see as responsible consumption. An example of a brand taking a stand is that of Fairy dishwashing liquid, which on International Women’s Day 2016 dropped the “Y” from its logo and became simply “Fair”, to highlight inequalities in the division of household chores in the UK.
13 Use authenticity to counter scepticism
Across Western Europe, consumers are becoming disillusioned with many of the brands they encounter, and this is definitely the case in the UK, where only 7 percent of consumers describe brands generally as “open and honest”. But not all brands are equal, and brands that feel authentic to consumers can overcome this kind of scepticism, according to research by Cohn & Wolfe. In its annual Authentic Brands ranking, it identifies British brands John Lewis, Marks & Spencer, The Body Shop, the BBC and Boots as leaders in bridging the “authenticity gap”, and finds that the most authentic brands get bought more and recommended more. Authentic brands aren’t immune from making mistakes, but their authentic pedigree makes them more easily forgiven if they make a correction. What authentic brands have in common is: They keep their promises on quality, they treat customers and their data well, and they communicate honestly and act with integrity.
14 Don’t interrupt – engage
Marketers around the world are facing this same dilemma: the harder they try to compete for consumers’ attention, the greater the risk of alienating them. This problem is particularly acute in the UK, where 40 percent of consumers say they actively ignore brands online, among the highest in Europe, and are flicking channels when watching TV. Brands need to work with this knowledge rather than try to shout louder. Offer something that’s truly useful, funny, informative or entertaining that they want to engage with, whether that’s video content, a quiz, a real-world experience or something else. This might mean the brand has to take a backseat, presenting or sponsoring a piece of content rather than being the star of the show.
15 Show the effect, don’t explain the spec
UK consumers are both sophisticated and impatient. Long lists of product features are not considered interesting; if people want detail, it needs to be accessible online, but not served up in brand communications. Consumers here tend to respond not to what a product or brand does, but rather the effect it can have on their lives, and a memorable, emotionally relevant message. HSBC, for instance, recently showed the benefits of its one-day mortgage approval service through the story of a father supporting his daughter’s ambition to be a swimmer; in the “Tomorrow is only a day away” ad, he manages to act quick quickly when a house with a pool goes up for sale.
16 Social media isn’t just one thing
Different social platforms are used by different audiences in different ways. Twitter is where people vent their frustrations, and Facebook is where they connect with friends and family, though young users are more likely to be instant messaging on the platform than sharing posts publicly. Instagram is where people tend to share a special moment. What all of these platforms have in common is that they can help brands punch above their weight when it comes to ad budgets. More than four-fifths – 85 percent – of consumers find visual user-generated content more influential than professional images from brands themselves, and social media is where customers become brand ambassadors. Cosmetics retailer Lush, for instance, has emerged as an ethical champion on Instagram, with 10 times the tags as rival The Body Shop. Likewise, Converse beats Clarks on social. Brands that want to have social kudos have to give consumers the raw material with which to generate content.
17 Everyone’s online – young and old
Consumers of all ages are active online, from social seniors to connected kids. A quarter of over-75s use a tablet computer, and half of internet users aged 65 to74 have a social media profile. At the other end of the age spectrum, online media has overtaken television as a pastime for children aged five to 15, with kids spending an average of 15 hours a week online. This makes digital appropriate for brands targeting audiences beyond that they might traditionally have thought to be active online. Soft drink Ribena, for instance, is reaching young children with an interactive drawing app called “Doodle Your World”. Appreciate, though, that all this online time is leading many people to disconnect from their devices periodically. The UK’s communications regulator reports that one third of Brits have taken a “digital detox”.
18 Don’t forget about TV
Online is an essential part of the mix for most brands in the UK, but TV still accounts for a huge proportion of advertiser investment, and for good reason. Programming as varied as X Factor, Newsnight, Love Island and football unites a nation around the box. But TV viewing is changing, with cord-cutting and time-shifted viewing on the rise. Television account for 40 percent of consumers’ media time, with an average consumer tuning in for more than 3.6 hours each day, compared to 3.3 spent online. But people aren’t necessarily watching live TV; there’s time-shifted viewing and viewing on demand. Big national TV campaigns still have a role in building brands, but now addressable TV advertising can provide more targeted messaging. Specific commercials can be shown to certain consumers, based on their postcode, household income or other attributes. Brands can therefore optimise their campaigns on TV as they do online.
19 Young people aren’t who you think they are
The British people we call “young” are more diverse in their tastes, habits and motivations than we’ve seen before, and it no longer makes sense to talk in broad terms about “targeting under-35s” as if they are a single audience. Those people we call Generation Y (now aged 20 – 34) are far more likely than their teenage Gen Z counterparts to be receptive to advertising they encounter in the evening rather than throughout the day, and Gen Z are more likely to discuss ads with their friends.
What the generations have in common is hostility towards intrusive ad formats, and a preference for funny branded content and advice from tutorials and reviews.
20 See the world
Britain and UK brands have been exporting for centuries, and in taking goods and services to the world, they have also carried with them what have come to be regarded as British values and what it means to be “Made in the UK”. In the annual Best Countries ranking that features later in this report, it’s clear that what the UK means to international consumers puts UK brands at a distinct advantage. They are highly regarded, and known for strength and innovation. At home, meanwhile, shoppers are paying close attention to the provenance of the goods they buy and are prepared to pay a premium for home-grown brands and products.