By Steve Ingram, Director – KIT.
It has been a long hard slog, the past 12 months, and the impact of national lockdowns will continue to cause ripples across the UK for years to come. Still, as a direct result of being told to stay at home, 46% of Brits saw an increase in their cash savings over the past 12 months, which is estimated to be worth £192bn. But retailers need to hold on to their hats and brace themselves, as according to Scottish Friendly and Centre for Economics and Business Research (CEBR), households plan to spend 26% of this amount, approximately £50bn, during 2021.
Scottish Friendly and CEBR studied 50 years’ worth of households saving data and interviewed 4,000 UK adults as part of their study. It revealed that the frustration of consumers not being able to spend freely is likely to result in 29% of those planning to spend more, splashing their cash on travel and accommodation for UK-based holidays. But 28% will spend more on eating out, 25% on food and drink, 24% on clothing and footwear, 18% on household equipment and 14% on health products and service. One respondent sent out a clear message on what they are planning to do: “The experiences of 2020 have left me with pent-up demand for spending, and I plan to spend more in 2021 than I would otherwise have done as a result of the Covid-19 pandemic.”
There is likely more than a year of pent-up demand; as consumers began to reign in spending early in 2020 as the effects of the pandemic spread across the globe. As predicted, the slowdown in spending on big ticket items did materialise. Whilst only very limited holidays and travel were possible, you can see for yourself the lower numbers of recently registered cars, and large numbers of the population held back on those luxuries where they may have wanted to treat themselves.
Retailers that really know their customers will be in pole position
Welcoming customers back through the doors of stores will be a huge relief, and will also be a chance to show how much they are valued. Having kept in contact with their customers during the multiple tiers and lockdowns, store associates will be able to pick up on the personal details, and any changes to preferences, to curate the ideal experience for them. Reserving changing rooms to try on the latest collections, arranging test drives of the latest vehicle model, or making sure that specific watch or item of jewellery is available to see will be crucial in building confidence and reinforcing brand loyalty.
Investments made in Clienteling and Assisted Selling tools have been proven to increase order sizes and values, whilst also driving many more repeat purchases. Tools such as KIT have enabled store associates to maintain the relationship with their customers during times of physical store closures – encouraging sales through online stores, and helping with navigation and recommendation – and will be able to pick up in-person once the doors open.
Do not fall into the trap of spend, spend, spend – save some for later
But take care. From April 2021, there will be increases in car tax, council tax, the TV licence and NHS prescriptions. The bad news continues as many TV, broadband and mobile providers will also be upping their prices. Water bills will increase, and at the same time, millions of customers will see a rise in energy bills. Nearly all these price hikes start on 1 April, so while it is important to enjoy the relaxing of physical distancing rules and the emergence from lockdown, many challenges lie ahead for us all, not just retailers.