UK consumers are adapting to the pressures of economic change – from unemployment to higher taxes – in many ways, according to Tesco’s new UK CEO Richard Brasher.
Speaking at the annual Retail Week Conference, Brasher unveiled new Tesco customer research, which illustrated how families are experiencing economic uncertainty differently from one another.
“We all know the economy is having a big impact on consumer confidence – whether it’s unemployment, higher taxes, public spending cuts or higher fuel prices,” he said. “But these trends are experienced by different families in very different ways.
“An affluent family might not notice a rise in food, VAT or utility prices. But to a lower income family these increases mean £12 less to spend each week. That is equivalent to an increase in income tax of almost five percentage points. A single act or event in the national economy becomes millions of individual experiences in people’s actual lives.”
According to Tesco’s research, young people are worrying about missing out on future job opportunities if they compromise and accept a lesser position than they had hoped for. And many also worry about how they can afford to start a family.
However, UK consumers are adapting in interesting ways, said Brasher.
“Families are often pleasantly surprised being more resourceful can be enjoyable. They have learned to budget better, to cook from scratch, to do DIY,” he said.
And, despite all the doom and gloom, most families aren’t unhappy, Brasher added.
“They haven’t given up on their dreams. Going to college, having a great holiday, getting a home, getting married, having kids, building up a nest egg – all these dreams live on in tough times.”
Brasher said a determined and informed consumer had emerged out of the trend for adaptability. They know there is always a good deal out there – the trick is to find it, he said.
But it didn’t mean prices being battered down and down. “Value for money trumps being the cheapest,” he said. “Value for money can mean food is fresh or made for one – because that means less waste. It can mean doing more home-cooking with quality ingredients.”
Tesco said it has responded by investing in lowering prices – £200m on more than 1,000 lines – and by launching 2,100 new and improved products. It has introduced new partners – such as London Aquarium and Disneyland Paris – to Clubcard Rewards.
It is also responding to the strong consumer expectation business will do more to protect the environment and communities, by cutting CO2 in its business and investing in community champions and supporting programmes such as Race for Life.
Brasher said: “Times are tough – but customers are determined to get through to the other side. We’ve got to help them. This is what going the extra mile for customers is all about. But we must also understandtheir ambitions have not disappeared. They just need more help in realising them.”