Social Trends: How Britain behaves

People are living longer, children are leaving it later to flee the nest and the UK is now spending more than ever on holidays and leisure activities. These were the key findings of the comprehensive annual Social Trends study from the Office for National Statistics (ONS), which grabbed the headlines last week. But what do the profound social changes the report revealed mean for retailers?

Understanding the social trends of modern Britain is vital to help retailers meet the fast-evolving needs of today’s shopper. Family structures, adoption of technology and the age profile of the population are changing more quickly than ever, and retailers need to be on top of these changes if they are to survive this recession.

The ONS report revealed some worrying shifts in spending patterns. When it was first published in 1971, two thirds of household expenditure went on goods. But the volume of spending on leisure and recreation has increased eight-fold in the intervening years.

A threat to traditional retailing perhaps, but Richard McKenzie, partner at strategy consultants OC&C, says therein lies a strong opportunity that, at least some, retailers are starting to take on board.

“Retailers need to avoid the relative commodity business of shifting boxes. Tesco is a good example of this. Its range of categories is enormous. You have to find a way to be more than a product shifter; if you just sell clothes you will struggle, you need to sell an experience around that with fitting and service,” explains McKenzie.

The larger multiples have an obvious advantage when it comes to offering more services to their customers.
However, smaller retailers such as White Stuff, which has a cinema in its new York store, and lifestyle brand Joules, which offers advice on how to rear chickens, all add brand depth and reasons for people to go into stores and interact with the retailer.

You have to find a way to be more than a product shifter; if you just sell clothes you will struggle

Richard McKenzie, OC&C

“Westfield London seems to have missed a trick with combining more leisure with shopping,” says TNS Research International chairman Paul Edwards. While Westfield is opening a cinema complex in its west London centre, it has been delayed and won’t open until later this year.

Interbrand managing director Graham Hales agrees. “Shopping itself used to be more of a leisure activity and retailers built themselves around this world.” But this trend has waned with the increasing popularity of online shopping and particularly in light of the present recession.

One of the other key factors picked up from the ONS data was that almost a third of men and a fifth of women aged 20 to 34 still live at home. David Roth, chief executive of WWP’s retail practice The Store, says: “There is an influence that 25- to 35-year-olds will have on the spending patterns of their parents. This would especially be true in the technology sector.”

He points out: “There is a difference between the shopper and the consumer. A housewife buying beer will not necessarily consume it. With more people staying in their parental homes later those shopping on their behalf will have a significant influence.”

Edwards jokes that one strategy that needs to come into play here is “someone needs to find a way to kick the buggers out”. But as long as parents put up with their offspring the shift towards leaving home later will inevitably change spending patterns and particularly how people buy for the home.

Edwards says: “Big out-of-town furniture retailers are disappearing; you can’t imagine today’s young singles going there. The recession was an excuse to close them down. Those places have suffered for years because of new social trends. If you want that sort of choice now you go on the internet.”

Flat-pack generation

Hales says that despite the difficulty faced by the homewares sector, Ikea has been one of the smartest retailers in picking up on modern trends. McKenzie says: “Ikea has an incredible share of home-starter kits.” The trend for these has increased with more people in rented accommodation and more people leaving home to take up further education.

Hales adds: “It has been difficult for homewares as there are more people overcrowding existing space. Ikea picks up on a relatively cheap way of building homes and has a clear proposition.”

The other trend this points to, believes Saatchi & Saatchi planning director Gareth Ellis, is the growing importance of family as people look at their homes to escape hectic lives and make cost savings during the difficult economic times.

“The middle class is embracing, if you like, working class values and looking to family as a place of escape. Living rooms are becoming home cinemas, kitchens are becoming more like restaurants. If people can’t afford to go out they can watch Jamie Oliver on TV and make it at home,” says Ellis.

Future Laboratory director Tom Savigar calls it “homedulgence”. “This is about staying in more and being clever about ways of enjoying luxuries at home,” he explains.

Although such trends are being heightened by the recession these experts all agreed that these habits were likely to surpass the economic downturn and continue to be relevant to what people buy.

Savigar points to a US trend of milk home delivery in New York as further evidence of people staying at home. “This means that there is more importance placed on your home delivery style. So do you want it at the mercy of UPS? Or do what Net-a-Porter does and take control of it themselves?”

Savigar highlights another brand, which he believes has struck the right chord with its marketing for the modern family – Nintendo, with its Wii and DS ads.

These ads feature different generations of one family – such as Jamie Redknapp’s or Ronan Keating’s – using the games to interact and bond. “Nintendo Wii allows inter-generational cohesion. In Japan it is targeted purely at over-50s as a keep-fit product.”

Ellis agrees. “The gaps in generations are so small now. Grandparents are involved more than before and families are becoming a more adaptable, multi-generational social unit.” 

The idea of including all the generations of a family is one lesson that should really be adhered to by retailers targeting the modern family. The older generation is particularly key to this as the ONS data shows that people are living longer and those over state pension age now outnumber those under 16 for the first time.

“Older folk do not want to be treated as older folk,” says Edwards. He believes retailers need to make sure that the older generation is included within their product ranges rather than making them a separate target.

Roth, however, feels that this age group is being forgotten completely and is not properly catered for by retailers. “Brands tend to have a love affair with younger customers. There is a territory open for retailers to take advantage of.” He explains: “This is not about selling wheelchairs and stair lifts.”

Savigar points out that this age group is also one of the hardest to please. “50-plus customers are very demanding and can’t have the wool pulled over their eyes.”

People will make savings to allow them to have a holiday and eat out or have a treat

David Roth, The Store

He says this age group are increasingly interested in longevity so will look at preventative healthcare and keeping fit to ensure a higher life expectancy. “Sports and leisure brands could really extend their reach here. You can’t target them as old, however – they are just more mature.”

Savigar also says there is a key opportunity for the 50 to 55 age group he calls “generation liberate”. “They are free from debt and dependents and are looking for a mid-life release. They may want to travel or upgrade their homes and technology. Now they may be looking at DIY as they are not selling their houses as they thought they would,” he says.

Brand loyalty will also increase in importance as life expectancy continues to rise. Roth says: “You need to take more of a long-term lifetime view of a customer because if people are living longer it is more important. If you upset a customer that is a lot of lifetime custom to lose.” He also points out that the older age groups are increasingly among the wealthiest.

The Tesco test

Edwards believes that one of the best ways of looking at modern society is to look to the grocers. “Tesco is the best way to see how society is changing. It is a better way to see changes than reading a report,” he says.

McKenzie agrees and applauds the way that grocers respond to changing families and economic circumstances.

He maintains it is still the mum that is the absolute key to many purchases. “You need to respond to a stressed mum on a budget,” he says. “The response of Sainsbury’s, particularly in the downturn, has been good. Feed your Family for a Fiver resonates as that is what they are trying to do.”

Edwards adds that the trend towards single parent families and people living alone has also been well addressed by the big supermarkets, with “sensible meals for one and being catered for if you go to a Tesco Express or a Sainsbury’s Local”.

He says this is also important for divorced parents who perhaps only have children for a portion of the week, as they can easily change patterns from a big shop when the children are there to smaller purchases in the convenience stores for the rest of the time.

Caught in the web

The modern trend that has shifted perhaps most dramatically in the past few years is the internet and how it is being used in commerce. Only 29 per cent of households owned a computer in 1997 compared with 70 per cent in 2007, according to the ONS.

Ellis believes that the web will continue to have a huge influence in how retailers conduct relationships with customers and that they will need to become more creative. “Online behaviour is affecting offline and people are becoming more used to sharing information and ideas,” he says, pointing to ever popular social network sites. He says that this gives businesses an opportunity to “co-create” products, highlighting Walkers’ campaign to create a new flavour of crisps as one such example.

“You can also use online to encourage people to come into store for product demonstrations or VIP evenings,” Ellis suggests. 

Consumer behaviour will undoubtedly be changed by the recession, but these changes might not be as deep as many expect. “My hunch is that indulgent behaviour won’t collapse. People will make savings to allow them to have a holiday and eat out or have a treat,” Roth forecasts.

The pace of behavioural change is being accelerated by the recession. But regardless of the downturn, retailers need to be prepared for the speed with which consumer tastes change. As Roth puts it: “We are not programmed to go backwards as consumers and as human beings.” It will be those retailers that recognise this that prosper.