Spending power for British consumers is set to reduce over the next six months as the cost of living crisis hits online shopping purses.
More than a quarter (26%) of Brits responding to a new survey say they have cut back on their online spending over the past six months, but 39% said they had spent the same and 34% admitted they had spent more.
The latest annual UK Direct-to-Consumer Report 2022 from consumer research platform Attest concluded that the uptick in spend for more than a third of consumers is potentially due to rapidly rising costs across consumer goods sold online.
The results point to a gloomier outlook for the potential of British consumer spending for the rest of the year as the cost of living crisis is predicted to “cut down back to size” the significant growth that many online retailers enjoyed over the height of the COVID-19 pandemic.
Most frequent online shoppers will be spending less
Attest’s survey of 1,000 British consumers revealed that while 21% of consumers thought their online spending will increase, almost three in 10 (28%) said they thought the amount they will spend will fall over the next six months – a net 7% of people saying they will be spending less online. Despite the rest of the respondents saying their spending will stay the same, reduced purchasing power could actually lead to these consumers affording fewer purchases, the research said.
Shoppers aged 35 to 44 – those that shop online most frequently – and 55 to 64 reported the biggest drop in spend, with a net 14% in each group pointing to a drop in their online spending over the next six months. However, one in 10 consumers aged 18 to 24 expect their spending to increase.
Attest said: “There are two ways to interpret this data; either people think they’ll favour online shopping over the high street - perhaps as a way to find better deals – or they’re anticipating having to spend more simply because of the rising cost of products.”
Search engines rise in importance
The research uncovered some shifts in consumer shopping journeys – with search engines ranking as the number one place to start. Almost four in 10 (37.4%) shoppers said they began a shopping ‘trip’ online from a search engine, compared to 34% in Attest’s 2019 research. The shift to search has hit Amazon – which now has only 33.6% of shoppers starting their journey at the online giant (compared to 37% in 2019).
Meanwhile, only 20.9% of shoppers said they were most likely to start a shopping journey by heading directly to a brand’s website.
“This is a good thing for D2C brands, giving shoppers more opportunity to land upon your website. But it does mean that an increasing portion of your marketing budget should be allocated to Google AdWords and SEO,” the research said.
Social media was a starting point in online shopping journeys for 6% of those surveyed, but this jumped to 13% among consumers aged 18 to 25.
Search engines were also the prime prompter to drive people to make a purchase, with 22% of respondents saying that search was what drove them to make their last purchase, compared to 10.4% saying they spent in response to a social media post, and 8.5% because of a marketing email.
Some categories “up for grabs” in online shopping race
Nearly 88% of British consumers have shopped direct-to-consumer (D2C) in the past six months, making an average 3.9 purchases, the survey found.
The categories with the strongest commitment from consumers for online shopping were gifts (69.2% of shoppers) or tech (68.9%), clothes (61.9%) and health and fitness products (57.7%). However, categories such as beauty, baby and child and furniture had an equal likelihood of consumers shopping both online and in-store, meaning, according to Attest, that these categories were “up for grabs” and retailers will have to work harder to capture customers.
Price trumped all other factors in terms of purchasing decision, including quality, which placed second, according to the survey, while three in 10 consumers believe that prices are more competitive online than high street counterparts – a potential advantage for online retailers during the cost of living crisis.
Another positive trend is that consumers are prepared to wait longer for their goods to arrive than they were three years ago – with just 14% saying they expect to wait no longer than a couple of days (compared to 22% in 2019). The majority still expect their goods in three to five days (57%), but 28% now say they are prepared to wait longer than five days.
Jeremy King, CEO and Founder of Attest, said: “What’s clear from this research is that a significant section of British society has tightened their belts in the last six months when shopping online. The outlook for the rest of 2022 is not much rosier for D2C brands as consumer sentiment remains cautious in the face of a rapid rise in costs across all consumer goods.”
“However it’s not all bad news as the data highlights how Britons have made D2C brands a part of their everyday shopping experience, with nearly a quarter of Brits making at least one D2C purchase every month. In addition, the data finds that nearly a third of UK consumers consider D2C brands to be more competitive on price than their high street counterparts. This perception could be a critical advantage moving forward for D2C brands as they try to overcome consumers’ worries regarding ongoing economic uncertainty and shrinking purchasing power.”