The UK’s cost of living squeeze is making Millennials and younger demographics more sensitive to pricing and promotions, the latest research from antuit.ai, the leader in SaaS Artificial Intelligence (AI) demand forecasting solutions, reveals.
With increasing numbers of retailers passing on rising production costs – prompted by supply chain tension and labour market shortages – to the consumer, the CBI warns shoppers face the biggest price rises in 30 years this Christmas. Meanwhile, the British Retail Consortium’s monthly monitor showed shop prices grew +0.3% year-on-year in November, up significantly on the -0.4% dip year-on-year the month before, as rising prices begin to intensify the UK’s cost of living squeeze. With inflation rising, and consumers facing higher fuel and energy costs as well as increased taxes, the CEBR suggests typical UK households will each spend £1,700 more per year on costs in 2022, putting downwards pressure on disposable incomes.
And it appears this ‘cost of living crunch’ is increasingly impacting younger demographics of UK consumers. Original research of over 2,000 UK shoppers by antuit.ai showed Millennials were the most likely demographic to experience price sensitivity, with two thirds (65%) of 25-34 year olds saying they had become more responsive to pricing since the start of the pandemic, +4% higher than the average UK consumer.
Almost half (49%) of Millennials had cut back on their grocery spend due to economic uncertainty, while 52% had traded down from branded goods to own brand products, compared to 21% of 55-64 year olds and just 13% of those of 64 years of age. Meanwhile, 54% of 25-34 year olds cut back on fashion spend due to either job or financial uncertainties, +12% higher than the typical UK shopper.
Almost seven in ten (68%) of Millennials said they had become more responsive to promotions, according to antuit.ai’s poll, while a study by XCCommerce, showed 56% of UK shoppers cited discounts are the most important factor when considering where to buy, increasing to 70% amongst 18-24-year olds.
Yogesh, Kulkarni, co-CEO at antuit.ai, commented: “Faced with rising sensitivity among consumers prompted by the cost-of-living squeeze, retailers are having to draw an even finer line when it comes to pricing and promotions – while they must drive demand on the one hand, ensuring consumers aren’t priced out of remaining loyal, they must closely manage margin protection on the other. By intelligently optimising pricing, markdowns and promotions, based on demand triggers, retailers can make the granular decisions needed at each store location to increase sell-through and protect margins, whilst meeting consumers expectations on prices and discounts.”