Over the last 12 months, UK households have experienced various challenges, with many forced to cutback on expenditure on non-essential items to deal with the rising cost of living.
But is that the complete picture? And what does the changing and evolving economic landscape mean for businesses and organisations looking to better understand their customers and their behaviours?
The cost of living crisis impacts different demographics in different ways. New insights from Experian carried out with population segmentation tool, Mosaic,
reveals more than a third (35%) of households – some 10 million homes – are equipped to recover from a temporary financial issue. This may be in the form of a job loss, a relationship breakdown, or an unexpected emergency cost.
As expected, households within the ‘Prestige Positions’ and ‘City Prosperity’ Mosaic groups were found to have the most protection from rising costs. Typically, these groups have high-paying, professional jobs, own large properties, are based in the South-East
and working in London.
Indeed, while these groups aren’t immune to the same challenges as everyone else, they can still maintain and enjoy their lifestyle, with an estimated spend of more than £2,000 a month on non-essential items such as holidays and restaurants.
At the other end of the spectrum, the least affluent households, typically low-income families and city residents in high density rental housing, will see reductions in spending power in excess of 25% – representing around nine million UK households.
Overall, discretionary income is predicted to by 19% over the course of 2023, with all demographic groups set to experience a decline in their discretionary income over the next 12 months.
Your Business Strategy
Like households, as businesses and organisations make decisions about how best to allocate resources, data-driven insights are critical for businesses and organisations seeking to understand the changes their customers are experiencing.
From identifying vulnerable customers, through to pricing and planning for product launches, businesses need to understand the impact that is being felt by the public, and how that influences what they can spend.
Understanding the evolving demographics of the UK is essential for organisations of all shapes and sizes, helping them to connect, engage and support their customers through what is a challenging time.