1、Mintel experts discuss the differences and similarities between the current and previous recessions,with recommendations to help brands weather the storm.Recession and the cost of living crisis:Key challenges and opportunities for brands in the UK Experts in what consumers want and whyHow bad will t

2、he UK recession be?The latest GDP figures showed that the UK economy grew by 0.1%in November,boosted by the World Cup and spending on food and drink.But bad economic news continues to stack up.The Bank of England is predicting a“very challenging”two-year recession.The Office for Budget Responsibilit

3、y(OBR)has forecast a 1.4%fall in GDP(the standard measure of a countrys total economic activity)in 2023,a significant downgrade from its previous expectations.Most important for consumers is the fact that inflation is expected to stay high throughout 2023 and unemployment to start increasing.The Bri

4、tish public is picking up on this pessimism.Research run by Mintel in November 2022 shows that 90%of consumers expect inflation to rise over the coming year,80%that interest rates will rise further,and 42%that the UKs economic output will fall.Consumers recognise that this will affect their financia

5、l well-being too,as 63%think that the level of inflation will harm their financial situation,and 50%that the UKs economic struggles will hurt their finances.Toby Clark,Director of Research,EMEAof UK consumers say they expect that the UKs economic output will fall in 2023.42%2What are the brand oppor

6、tunities during a recession?It is easy to be so focussed on the threats that you ignore the opportunities that economic upheaval can provide.The 2008 financial crisis was painful for many brands,but those that got their communication and innovation strategies right emerged in a stronger position.The

7、 financial crisis also triggered a wave of disruptive innovation as a new generation of entrepreneurs grew frustrated with corporate life,reassessed their priorities and decided to step out on their own.At Mintel,we have been supporting our clients with market-leading data and insight for over 50 ye

8、ars.Our institutional knowledge and cross-category expertise mean that were uniquely positioned to look back at previous periods of economic disruption and understand what brands can learn from the past.What are the differences between the 2008 and 2023 recessions?In some ways,the coming recession w

9、ill be very different from the post-financial crisis slowdown.On the downside,inflation is much higher than we saw last time around:were facing a period of dreaded stagflation where low economic growth combines with rising prices.But there are also upsides.The OBRs forecast of a 1.4%fall in GDP is a

10、mong the more negative forecasts out there,compared to a 2.2%fall in the last three months of 2008.Also,while unemployment is likely to rise,it is currently extremely low.Whats crucial for the consumer economy is that Brits are going into this slowdown with a war chest of savings that they built up

11、over the lockdown years.The Bank of England estimates that consumers saved almost 200 billion more over lockdown than they would otherwise have done,and Mintels Global COVID-19 Tracker data shows that saving intentions are still strong.Based on our latest consumer data,industry knowledge and experie

12、nce in guiding brands through previous recessions,in the pages that follow,my colleagues and I examine key areas of consumer spending and offer analysis of how the coming recession will differ from the post-financial crisis slowdown.We discuss where the similarities begin and end,and offer our top r

13、ecommendations for brands in Food and Drink,Online Retail,Travel,Financial Services and Beauty and Personal Care.The 2008 financial crisis was painful for many brands,but those that got their communication and innovation strategies right emerged in a stronger position.3Mintel ReportsThe smartest way

14、 to understand consumer markets.WHAT IT ISMintel Reports are a series of comprehensive reports rooted in robust data and market analysis to provide you with expert insights and strategic recommendations.WHAT IT COVERSEach report combines consumer research and drivers,product innovation and/or compet

15、itive analysis as well as market size to give you a complete view of your market.Identify future opportunities by understanding what your consumers want and why.See the trends and innovations impacting you on a local and global level.Make better decisions faster by keeping informed on whats happenin

16、g across your market.010203HOW IT HELPS400+observations every month15 sectors14 demographic groupsFood and DrinkThe big difference between the 2023 recession and that of 2007-08 is that todays consumers place more value on their health.This means shoppers will consider health benefits more heavily w

17、hen making their grocery purchase decisions and,where possible,will even pay more to protect this prized asset.The health trend was still emerging in 2008,with just one in four(24%)UK food and drink launches making a health claim*,according to Mintel Global New Products Database(GNPD).Yet in 2019a f

18、ull year before the pandemicover a third(36%)of launches made a health claim.COVID-19 has made consumers more conscious of the link between diet,health and mood,but,ironically,health claims slipped back to 30%in 2022.This could be because companies have rowed back on their R&D plans.Jonny Forsyth,Di

19、rector,Mintel Food&DrinkCompared to the previous recession,this time shoppers will consider health benefits more heavily when making their grocery purchase decisions and,where possible,will even pay more to protect this prized asset.*Based on the number of launches making a free-from,minus or added

20、nutrition claim as a proportion of all food and non-alcoholic drinks launches.5Food and drink consumers prioritise health benefitsMintel Global Consumer research shows that among UK adults,45%define food and drink value as products with additional health benefits,making it the most prized quality th

21、at shoppers seek.A product with natural ingredients is the second most important(43%)with it is lower in price than other products in third place(42%).This emphasises that value is not just about cost,but the functional and psychological benefits consumers perceive they will receive in exchange for

22、the price they pay.The fact that UK consumers value natural claims in food and drink indicates that consumers view natural as better quality and better for you.Making organic claims is one way for food and drink brands to dial up their naturalness.However,organic food and drink sales struggled in th

23、e UK during the 2007-08 recession because,at the time,consumers did not value the claim enough to pay extra for it.As a result,organic claims in UK food and drink launches fell from a high of 10%in 2010 to just 4%in 2012,according to Mintel GNPD.Despite there being more health-conscious consumers in

24、 2022,history looks likely to repeat itself,with just 6%of UK launches making an organic claim year-to-date versus 10%in pre-pandemic 2019.While health may be more important to consumers now than in 2008,food and drink brands must avoid the error of prioritising healthier messaging to the detriment

25、of taste.The vast majority of UK consumers choose food for taste.For example,68%of consumers look for taste when buying a snack,making it far more important than factors such as freshness,healthiness or convenience.Indeed,comfort eating has been on the rise since the start of the pandemic,with almos

26、t half(48%)of UK adults claiming it has been easier to justify eating indulgent food/drink since COVID-19,rising to 64%for 16-34-year-olds.Brands that will triumph in the forthcoming recession will be those that prove their value by delivering,and effectively communicating,taste,while also reassurin

27、g consumers that their product is compatible with,and will maybe even enhance,a healthy lifestyle.6Online RetailAccording to Mintel research on the UK retail sector,in 2008,the online channel accounted for 4.9%of retail sales.Fast-forward to 2022 and online is estimated to finish the year accounting

28、 for 25.9%of sales.This 21 percentage point difference equates to,in todays money,92.3 billion more moving through online than in the previous recession.This shift underpins much of the change the UK retail sector has undergone in the intervening period.Online first established itself with value,the

29、n range and,in the last decade,convenience.But it is that first point that has caused such disruption:in 2022,54%of shoppers say the best prices are found online,which means that many consumers will look online for value in the coming year as they did during the past recession.Price is important,but

30、 value judgements for most are not solely based on this.Convenience is an equally important factor.The convenience that the online channel has added over the past decade is not just about improved delivery speeds,but it is also that its become the dominant place for browsing,interaction and a host o

31、f other critical shopping behaviours.Indeed,there is little within shopping behaviour that online now doesnt touch.Thats why even those who have long eschewed online,such as Primark,are now engaging in the channel.When we look at the expected buying behaviours from the past recession,we see that onl

32、ine retail had a big role to play and expect to see the same resurface in 2023.Nick Carroll,Retail Category Director,Mintel Reports EMEA7In 2008,online accounted for 4.9%of UK retail sales.In 2022,online is estimated to finish the year with 25.9%of UK retail sales.Thats 92.3 billion more moving thro

33、ugh online than in the previous recession.Factors helping to boost online retailCredit and alternative payment use lend themselves well to online given how easy they are to use/set-up compared to when in a physical store.Access to alternative payments is a strength of online,underlined by the fact t

34、hat leading,new-wave credit/buy-now-pay-later providers are digital-first operations.Price comparison shopping,largely done on a home computer during the last recession,is now unleashed with the majority of consumers carrying their savvy buying decision-maker in their pocketa smartphone.Additionally

35、,the shift to second-hand and pre-loved that we saw in the past recession has also resurfaced.However,rather than the revitalisation of the physical charity shop sector that we saw in the past recession,the trend is likely to create a significant boom for the new,peer-to-peer platforms,not simply in

36、 terms of purchasing but also selling.In fact,45%of those already selling online say financial concerns have caused them to sell more online in the past year.Greater use of the online channel over the past 15 years has created a savvier online shopper and,in turn,placed greater pressure on operators

37、.From buy-try-return to minimum-spend workarounds,there are now a host of undesirable online consumer behaviours.With retailers today facing many of the same financial pressures as shoppers,such behaviours put added strain on the bottom line.Multi-channel players are best suited to clamp down on som

38、e of these behaviours.For example,charging for postal returns,while in-store returns remain free,is a move that multi-channel retailers can adopt without creating significant barriers to purchasing.According to 51%of online shoppers,it would encourage them to make more returns in-store.With unemploy

39、ment likely to remain markedly lower than during the past recession,this will mean continued opportunities for multi-channels to create conveniences for consumers,including home delivery and in-store collection.If major anchor tenants can succeed in driving online demand into physical locations then

40、 this will be a net benefit for all high street tenants.of UK Amazon shoppers say they regularly check the prices of products they see in-store on Amazon.72%8TravelJennie Bryans,Travel and Leisure Analyst,Mintel Reports UKThe emergence of the COVID-19 pandemic nearly decimated the international trav

41、el market with various national lockdowns,vaccination restrictions and testing requirements in place for the better part of two years.As a result,many consumers remain eager to get away and focus on their revenge travel plans.This pent-up demand for travel has subsisted despite the rising cost of li

42、vinga key difference from previous recessions.In previous economic crunches,travellers were more likely to substitute an overseas trip for a UK break to avoid the associated costs.This time around,even though the domestic market provides an attractive option for those looking to save money on travel

43、ling abroad,there remains a large group of consumers who are keen to explore destinations outside of the UK,given that these locations were off limits for so long.One trend which remains similar to previous recessions is the number of holidays being taken by UK consumers.With increasing financial di

44、fficulties,64%of consumers are likely to cut back on additional short breaksrising to 81%of those who describe their financial situation as a struggleaccording to Mintel research on the UK travel industry.Throughout the current cost of living crisis,consumers are expected to prioritise their main su

45、mmer holiday,with shorter city breaks moving to the back burner.9The re-emergence of package holidays with more payment flexibilityPackage holidays are also popular options amongst consumers during periods of economic downturn.In previous recessions,the package holiday market outperformed the indepe

46、ndent sector(ie booking flights and accommodation separately)in terms of volume growth as cash-strapped holidaymakers sacrificed wider choice and flexibility in favour of low-cost,all-inclusive package deals.The trend was also fuelled by a resurgence of support for the traditional package attraction

47、s of convenience and financial protection.This remains the case within the current cost of living crisis,with many operators also offering flexible payment options.Brands such as Tui are,for example,offering zero/low deposits on package holidays,as well as the option to spread payments across multip

48、le instalments.This enables consumers to have the confidence to book package holidays,but with the convenience and reassurance of a monthly payment plan,ensuring the overall cost of the holiday remains manageable.The travel market is expected to weather the recession fairly well compared to other se

49、ctors.However,operators value propositions will face heavy scrutiny as consumers strive to get the best deal possible.Consumers will increasingly expect brands to highlight budget-friendly options throughout the booking process;for example,through the use of booking calendars showing differing price

50、s on a range of departure dates,as well as flexible payment options.Brands should also promote the cost benefits and other advantages available with lower-cost holidays,such as camping and caravanning breaks,all-inclusive options and domestic holidays.However,it is also important for brands to remem

51、ber that there remain consumer groups,especially those with higher incomes,who are not expected to be as heavily impacted by rising inflation,and who have built up healthy saving pots during the pandemic.Such consumers remain eager to spend more on holiday upgrades to ensure a premium experience,whi

52、le they are also more likely to travel further afield or even take the holiday of a lifetime.While the travel market is expected to weather the forthcoming recession fairly well,operators value propositions will face heavy scrutiny as consumers strive to get the best deal possible.10Financial Servic

53、esWhen it comes to financial services,theres a glaring difference between this recession and the 2008 slowdown.The recession 15 years ago was triggered by the near collapse of the global financial services industry.Even though retail banks only played a minor role in triggering that crisis,their rep

54、utation and brand strength were hit hard.This time around the situation is very different,and banks are going into this slowdown in a much better state,both in terms of their balance sheets and their branding.During the pandemic years,the banks worked hard to support their customers,offering payment

55、 holidays and flexibility to borrowers.Mintel research on consumer attitudes towards debt and credit shows that 65%of consumers who have at least one type of credit product say that they trust banks to help and support them.The other major difference is that many consumers are going into this slowdo

56、wn in a better financial state than they were back in 2008.Back then,a boom mentality had set in,the sub-prime lending market was in full swing and many people had taken on unsustainable levels of debt.In 2023,by contrast,many are still sitting on a sizeable amount of lockdown savingsmoney that they

57、 were able to tuck away because so many areas of discretionary spending were effectively off the table for two years.of UK consumers who have at least one type of credit product say that they trust banks to help and support them.65%Toby Clark,Director of Research,EMEA11Higher interest rates will hel

58、p with the greater focus on savingRising interest rates are generally seen as a threat to consumers financial well-being,but after a decade and a half of rock-bottom rates,many savers will welcome the increase.Notably,Mintel research shows that 26%of UK consumers think theyll benefit from changes in

59、 interest rates over the next year.There are similarities to previous recessions,though.Whenever the economy starts to struggle,consumers focus more on savings in an attempt to give themselves a degree of financial security.Were already seeing that tendency in our research as,for example,49%of consu

60、mers were able to add to their savings in the last three months.The biggest similarity between this recession and the post-financial crisis slowdown in 2008 is that although most people will get through this downturn with a decent financial state,many will find it incredibly difficult.Whether the ca

61、use is a collapse in the global financial system,post-pandemic supply chain challenges or soaring prices caused by the conflict in Ukraine,a recession will mean that some consumers will fall into greater levels of debt.They could also experience their savings being run down and,in some cases,their h

62、omes being at risk.This presents the greatest opportunity for banks.They have a crucial role to play in supporting their customers through tough times,whether thats by helping them better manage their finances and maximise the returns of what savings they do have,or by dealing with severe financial

63、distress sensitively and proportionately.Last time around,banks entered the recession as villains of the story.This time,just as in the pandemic,they are in a much stronger position to be seen as heroes.Banks have a crucial role to play in supporting consumers through tough times,whether thats by he

64、lping them better manage their finances and maximise their returns or by dealing with severe financial distress with sensitivity.12Beauty and Personal CareDuring the post-financial crisis slowdown,beauty and personal care proved its resilience against economic headwinds and the lipstick effect boost

65、ed sales of mood-lifting yet affordable makeup and fragrance products.This is a trend that is already resurfacing,with sales of lip colour products in the UK predicted to increase by 25%in 2022,while sales of fine fragrances are also predicted to increase by 9%.Although some of this growth can be at

66、tributed to post-COVID-19 recovery,it also reflects the joy that these products can incite when consumers are struggling.Further confirming this to be true,41%of beauty/personal care consumers who buy new products do so to treat themselves,rising to 62%of women aged 16-24.Although the lipstick effec

67、t persists,there have been some significant shifts in consumer behaviour in recent years,impacting what products consumers turn to for a feel-good boost.Makeup has historically been a staple outperformer during difficult times;Winston Churchill is even said to have refused to ration lipstick during

68、WW2 because of its ability to buoy morale.However,makeup application habits shifted dramatically during the COVID-19 pandemic.Consumers embraced infrequent applications as they spent more time at home,and although a return to normality is well underway,working from home remains more commonplace.The

69、adoption of digital lifestyles only exacerbates the issue,as it means consumers dont rely on physical products the way they did previously,with 23%of makeup buyers saying they often use digital filters and editing apps instead of applying makeup,rising to 40%of 16-24s.Similar trends are impacting fr

70、agrances,too.Samantha Dover,Beauty and Personal Care Category Director,Mintel Reports UK13Sustainability has become a bigger factor in purchase decisions Consumers are scrutinising not only what they buy,but how much they buy.This means product proliferation is falling out of favour,impacting everyt

71、hing from facial skincare(which outperformed during COVID-19)to traditional outperformers like makeup and fragrances.Meanwhile,although eco and ethical claims are yet to be a primary driver in beauty/grooming purchase decisions,they can sway consumers toward new brands and products,as the presence o

72、f these claims can support the feel-good boost consumers are craving.This means beauty and personal care brands need to pay attention to what motivates consumers to weather this storm,whilst also creating new usage occasions to fill the gaps left by COVID-19.As consumers embrace a less is more appro

73、ach to beauty/grooming for the sake of their finances,convenience and the environment,creating products that spark enjoyment and provide multifaceted benefits will appeal.For example,in fragrances,this trend is coming to the fore via functional scents that evoke certain emotions or provide a sense o

74、f escapism.This approach,going beyond pricing to assert value,is particularly important during the current income squeeze,as another fundamental shift since the last slowdown has been the rise of masstige brands that offer claims and benefits that mirror those seen in prestige products,but at a slig

75、htly more affordable price point,meaning a high price alone no longer determines quality.of female beauty/personal care consumers aged 16-24 who buy new products do so to treat themselves.62%As consumers embrace a less is more approach to beauty/grooming for the sake of their finances,convenience an

76、d the environment,creating products that spark enjoyment and provide multifaceted benefits will appeal.14Navigate the recession and shape your future with Mintel ConsultingWere here to take the guesswork out of your process,solve your business challenges and help you move forward faster with confide

77、nce.Allow us to listen to the issues youre facing and well propose research solutions rooted in global expertise of consumer markets and data-science-led analytics.Bespoke insightOur analysts curate insights and provide tailored recommendations.Custom problem solvingMining syndicated data for Compet

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79、shaping futures for 50 years.Find out how we can shape yours too.CONTACT US USAbout MintelMintel is the expert in what consumers want and why.As the worlds leading market intelligence agency,our analysis of consumers,markets,product innovation and competitive landscapes provides a unique perspective on global and local economies.Since 1972,our predictive analytics and expert recommendations have enabled our clients to make better business decisions faster.Our purpose is to help businesses and people grow.2023 Mintel Group Ltd.All rights reserved.