As technology advances, generations mature and the economic climate continues to shift, we’re seeing some interesting changes to the way consumers spend. So what’s changing, and what can we expect in the future?
What people are spending more money on
According to government statistics, the biggest spending categories across UK households are still ‘transport’, ‘recreation and culture’ and ‘housing, fuel and power’ – it looks like no matter how external factors shift, people still need to pay their rent or mortgage, power their homes, and get from A to B. Interestingly, while the latter two categories have seen a steady increase since 2001, spending on transport is actually lower than it was in the early 2000s, despite an increase in recent years.
The biggest growth in spending, however, is in the ‘clothing and footwear’ category, which has risen from an average of £15 a week in the early 2000s to £25 a week – and if this trajectory continues we could see a further increase in spending in this category.
What people are spending less money on
While younger generations are often accused of wasting too much cash on takeaways, brunches with friends or weekend getaways, the UK as a whole is actually spending less in the ‘restaurants and hotels’ category than in the early 2000s. This may come as a surprise given the recent success of apps like JustEat and Deliveroo.
Spending in the ‘alcoholic drinks, tobacco and narcotics’ category has also seen a significant decline since the early 2000s, no doubt due to factors like higher taxes, the smoking ban and increased health awareness.
Perhaps an unexpected one is the decrease in spending on education, which has fallen from £17.90 a week in 2001, to just £8.70 in 2018 – though this is still an increase on the last couple of years, which could suggest that spending in this category could continue to increase.
Spending by age: anxiety vs confidence
A survey from Checkout.com found that anxieties around spending differ between different age groups. A whopping 75% of those aged 16-29 feel guilty after making a purchase, compared to 66% of those aged 30-44, 50% of those aged 45-59, and just 35% of those aged 60 and over.
So while it’s tempting to focus your efforts on Millennials and Gen Zs, it’s actually the older generations who are more carefree and confident with their spending.
Online vs in-store
The same survey from Checkout.com found that 35% of consumers would like to be able to buy things directly from businesses via social media, while a different survey from EmpathyBroker found that over half of UK consumers (51%) admit they now prefer to shop online rather than in-store.
However, that leaves just under half preferring to shop in-store – so physical stores are far from dead! In fact, over 81% of consumers admit to looking at products in stores and then purchasing online, so it’s clear that stores still provide a vital piece of the puzzle. Creating a consistent experience online and in-store is a great way to take advantage of both types of customer.
More awareness of spending habits
Thanks to the recent surge in fintechs and smarter banking apps, consumers are gaining more insights into their own spending patterns, empowering them to make changes to the way they spend. This new tech usually helps users to categorise their spending into categories like transport, groceries, entertainment and shopping, making it easier to see what they tend to spend money on.
This greater awareness could result in fewer impulse buys as consumers become aware of the impact these small, regular buys have on their overall financial situation. But the good news is this could result in more consumers saving for larger purchases – so we could see increased spending on things like holidays, cars or tech like TVs and laptops.
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